Will PRA Health Sciences, Inc.’s (NASDAQ:PRAH) Earnings Grow Over The Next Year?

After PRA Health Sciences, Inc.’s (NASDAQ:PRAH) earnings announcement in March 2019, analyst consensus outlook appear vastly optimistic, with profits predicted to ramp up by an impressive 60% next year, compared with the historical 5-year average growth rate of 54%. Currently with trailing-twelve-month earnings of US$154m, we can expect this to reach US$247m by 2020. Below is a brief commentary around PRA Health Sciences’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for PRA Health Sciences

How is PRA Health Sciences going to perform in the near future?

Over the next three years, it seems the consensus view of the 10 analysts covering PRAH is skewed towards the 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 PRAH’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.

NasdaqGS:PRAH Past and Future Earnings, July 22nd 2019
NasdaqGS:PRAH Past and Future Earnings, July 22nd 2019

From the current net income level of US$154m and the final forecast of US$341m by 2022, the annual rate of growth for PRAH’s earnings is 18%. EPS reaches $5.13 in the final year of forecast compared to the current $2.4 EPS today. With a current profit margin of 5.4%, this movement will result in a margin of 9.3% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For PRA Health Sciences, I’ve put together three relevant factors you should look at:

  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 PRA Health Sciences 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 PRA Health Sciences is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of PRA Health Sciences? 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.