Abano Healthcare Group Limited's (NZSE:ABA) most recent earnings announcement in July 2019 revealed that the company endured a significant headwind with earnings deteriorating by -26%. Below is a brief commentary on my key takeaways on how market analysts perceive Abano Healthcare Group's earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
See our latest analysis for Abano Healthcare Group
Analysts' expectations for the upcoming year seems optimistic, with earnings expanding by a robust 29%. This growth seems to continue into the following year with rates arriving at double digit 48% compared to today’s earnings, and finally hitting NZ$12m by 2022.
While it is helpful to understand the growth year by year relative to today’s level, it may be more beneficial gauging the rate at which the earnings are moving on average every year. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Abano Healthcare Group's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 10%. This means, we can expect Abano Healthcare Group will grow its earnings by 10% every year for the next few years.
Next Steps:
For Abano Healthcare Group, there are three essential aspects you should further examine:
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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 ABA 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 ABA 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 ABA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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