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Last week saw the newest full-year earnings release from Healthcare Services Group, Inc. (NASDAQ:HCSG), an important milestone in the company's journey to build a stronger business. Revenues of US$1.7b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.53, missing estimates by 8.3%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Healthcare Services Group after the latest results.
View our latest analysis for Healthcare Services Group
Taking into account the latest results, the current consensus from Healthcare Services Group's five analysts is for revenues of US$1.79b in 2025. This would reflect a credible 4.4% increase on its revenue over the past 12 months. Per-share earnings are expected to leap 35% to US$0.72. Before this earnings report, the analysts had been forecasting revenues of US$1.77b and earnings per share (EPS) of US$0.84 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$13.60, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Healthcare Services Group, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$12.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Healthcare Services Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.4% annualised growth until the end of 2025. If achieved, this would be a much better result than the 1.4% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 6.8% annually for the foreseeable future. So although Healthcare Services Group's revenue growth is expected to improve, it is still expected to grow slower than the industry.