In December 2018, First Horizon National Corporation (NYSE:FHN) released its earnings update. Generally, the consensus outlook from analysts appear pessimistic, as a -11% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 31%. With trailing-twelve-month net income at current levels of US$539m, the consensus growth rate suggests that earnings will decline to US$478m by 2020. Below is a brief commentary around First Horizon National’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.
Can we expect First Horizon National to keep growing?
The longer term expectations from the 15 analysts of FHN is tilted towards the negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of FHN’s earnings growth over these next few years.
By 2022, FHN’s earnings should reach US$533m, from current levels of US$539m, resulting in an annual growth rate of -1.8%. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of $1.81 in the final year of forecast compared to the current $1.66 EPS today. Fall in earnings appears to be a result of a falling top-line, with negative growth of -0.5%. With earnings declining at a faster rate over time, margins is expected to contract from 28% to 27% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For First Horizon National, I’ve put together three pertinent aspects you should further examine:
- 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 First Horizon National 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 First Horizon National is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of First Horizon National? 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.