The latest earnings announcement Vital Healthcare Property Trust (NZSE:VHP) released in August 2019 showed that the company experienced a slight headwind with earnings declining from NZ$100m to NZ$93m, a change of -6.6%. Investors may find it useful to understand how market analysts predict Vital Healthcare Property Trust’s earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for next year seems pessimistic, with earnings falling by a double-digit -14%. Beyond this, earnings should continue to be below today’s level, with a decline of -26% in 2021, eventually reaching NZ$70m in 2022.
Although it’s useful to be aware of the growth rate year by year relative to today’s value, it may be more beneficial determining the rate at which the company is moving every year, on average. The advantage of this method is that we can get a better picture of the direction of Vital Healthcare Property Trust’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -8.1%. This means that, we can anticipate Vital Healthcare Property Trust will chip away at a rate of -8.1% every year for the next couple of years.
For Vital Healthcare Property Trust, I’ve put together three essential factors you should further research:
- 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 VHP 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 VHP is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of VHP? 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 firstname.lastname@example.org. 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.