Baxter International Inc. (NYSE:BAX): Earnings Expected To Remain Subdued

On 31 December 2018, Baxter International Inc. (NYSE:BAX) released its most recent earnings update. Generally, analyst consensus outlook seem bearish, with earnings expected to decline by -2.5% in the upcoming year relative to the past 5-year average growth rate of 9.4%. With trailing-twelve-month net income at current levels of US$1.6b, the consensus growth rate suggests that earnings will decline to US$1.6b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Baxter International in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for Baxter International

How will Baxter International perform in the near future?

The view from 15 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of BAX’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:BAX Past and Future Earnings, March 14th 2019
NYSE:BAX Past and Future Earnings, March 14th 2019

By 2022, BAX’s earnings should reach US$2.0b, from current levels of US$1.6b, resulting in an annual growth rate of 9.1%. This leads to an EPS of $3.94 in the final year of projections relative to the current EPS of $3.05. In 2022, BAX’s profit margin will have expanded from 15% to 16%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Baxter International, I’ve compiled three key factors you should further research:

  1. 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.
  2. Valuation: What is Baxter International 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 Baxter International is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Baxter International? 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 editorial-team@simplywallst.com. 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.