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After Estia Health Limited’s (ASX:EHE) earnings announcement in June 2018, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 9.1% in the upcoming year against the higher past 5-year average growth rate of 68%. Currently with trailing-twelve-month earnings of AU$41m, we can expect this to reach AU$45m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
View our latest analysis for Estia Health
What can we expect from Estia Health in the longer term?
Longer term expectations from the 5 analysts covering EHE’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of EHE’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.
From the current net income level of AU$41m and the final forecast of AU$49m by 2022, the annual rate of growth for EHE’s earnings is 4.4%. This leads to an EPS of A$0.20 in the final year of projections relative to the current EPS of A$0.16. This initial high-growth revenue squeezes EHE’s margins. However, analysts are expecting earnings growth to catch up, and current margins of 7.5% to expand to 7.5% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Estia Health, I’ve compiled three key aspects you should look at:
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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.
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Valuation: What is Estia Health 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 Estia Health is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Estia Health? 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 editorial-team@simplywallst.com.