The Pennant Group, Inc. Just Missed EPS By 18%: Here's What Analysts Think Will Happen Next

Explore Pennant Group's Fair Values from the Community and select yours

Shareholders of The Pennant Group, Inc. (NASDAQ:PNTG) will be pleased this week, given that the stock price is up 18% to US$26.00 following its latest quarterly results. Statutory earnings per share of US$0.20 unfortunately missed expectations by 18%, although it was encouraging to see revenues of US$220m exceed expectations by 4.2%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the current consensus from Pennant Group's four analysts is for revenues of US$856.2m in 2025. This would reflect a reasonable 7.2% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to step up 15% to US$0.89. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$852.1m and earnings per share (EPS) of US$0.97 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

View our latest analysis for Pennant Group

It might be a surprise to learn that the consensus price target was broadly unchanged at US$32.80, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Pennant Group at US$37.00 per share, while the most bearish prices it at US$28.00. This is a very narrow spread of estimates, implying either that Pennant Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 15% growth on an annualised basis. That is in line with its 15% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.9% per year. So although Pennant Group is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Pennant Group going out to 2027, and you can see them free on our platform here.

It might also be worth considering whether Pennant Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.