Based on Aflac Incorporated’s (NYSE:AFL) earnings update on 31 December 2018, it seems that analyst expectations are fairly bearish, as a 5.2% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 8.8%. Presently, with latest-twelve-month earnings at US$2.9b, we should see this growing to US$3.1b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Aflac in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from Aflac in the longer term?
Longer term expectations from the 10 analysts covering AFL’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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 AFL’s earnings growth over these next few years.
By 2022, AFL’s earnings should reach US$3.0b, from current levels of US$2.9b, resulting in an annual growth rate of 2.1%. EPS reaches $4.33 in the final year of forecast compared to the current $3.79 EPS today. Margins are currently sitting at 13%, which is expected to expand to 14% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Aflac, I’ve compiled three pertinent 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 Aflac 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 Aflac is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Aflac? 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 email@example.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.