In June 2018, Premier Inc (NASDAQ:PINC) released its most recent earnings announcement, which revealed that the business experienced a major tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key numbers on how market analysts view Premier’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for the upcoming year seems pessimistic, with earnings falling by a double-digit -27%. Beyond this, earnings are expected to continue to be below today’s level, with a decline of -48% in 2020, eventually reaching US$99m in 2021.
Although it’s helpful to understand the rate of growth year by year relative to today’s figure, it may be more beneficial evaluating the rate at which the business is moving on average every year. The advantage of this approach is that we can get a bigger picture of the direction of Premier’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate 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 -9.8%. This means, we can anticipate Premier will chip away at a rate of -9.8% every year for the next few years.
For Premier, I’ve put together three fundamental aspects 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 PINC 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 PINC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PINC? 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.