What Are Analysts Saying About Abano Healthcare Group Limited’s (NZSE:ABA) Future?

The latest earnings release Abano Healthcare Group Limited’s (NZSE:ABA) announced in July 2019 suggested that the company experienced a major headwind with earnings declining by -26%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Abano Healthcare Group’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Abano Healthcare Group

Analysts’ expectations for the coming year seems optimistic, with earnings expanding by a robust 29%. This growth seems to continue into the following year with rates arriving at double digit 48% compared to today’s earnings, and finally hitting NZ$12m by 2022.

NZSE:ABA Past and Future Earnings, September 15th 2019
NZSE:ABA Past and Future Earnings, September 15th 2019

While it is helpful to understand the growth rate each year relative to today’s level, it may be more beneficial analyzing the rate at which the company is moving on average every year. The benefit of this approach is that we can get a better picture of the direction of Abano Healthcare Group’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 10%. This means, we can expect Abano Healthcare Group will grow its earnings by 10% every year for the next few years.

Next Steps:

For Abano Healthcare Group, there are three key aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is ABA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ABA is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ABA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.