After Fisher & Paykel Healthcare Corporation Limited’s (NZSE:FPH) earnings announcement in March 2018, analysts seem cautiously bearish, with profits predicted to rise by 11% next year relative to the higher past 5-year average growth rate of 18%. Currently with trailing-twelve-month earnings of NZ$190m, we can expect this to reach NZ$211m by 2019. Below is a brief commentary around Fisher & Paykel Healthcare’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from Fisher & Paykel Healthcare in the longer term?
Longer term expectations from the 8 analysts covering FPH’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of FPH’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 12% based on the most recent earnings level of NZ$190m to the final forecast of NZ$278m by 2021. EPS reaches NZ$0.48 in the final year of forecast compared to the current NZ$0.33 EPS today. The bottom-line growth seems to be caused by cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. Margins is currently sitting at 19%, which is expected to expand to 21% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Fisher & Paykel Healthcare, I’ve compiled three pertinent factors you should look at:
- 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.
- Valuation: What is Fisher & Paykel Healthcare 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 Fisher & Paykel Healthcare is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Fisher & Paykel Healthcare? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.