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Based on Healthcare Services Group, Inc.’s (NASDAQ:HCSG) earnings update on 31 December 2018, analysts seem fairly confident, as a 37% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 19%. By 2020, we can expect Healthcare Services Group’s bottom line to reach US$115m, a jump from the current trailing-twelve-month of US$84m. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect Healthcare Services Group to keep growing?
The longer term view from the 9 analysts covering HCSG is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 20% based on the most recent earnings level of US$84m to the final forecast of US$162m by 2022. EPS reaches $2.15 in the final year of forecast compared to the current $1.13 EPS today. In 2022, HCSG’s profit margin will have expanded from 4.2% to 6.6%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Healthcare Services Group, I’ve put together three important 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 Healthcare Services Group 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 Healthcare Services Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Healthcare Services Group? 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.