In December 2017, Reinsurance Group of America Incorporated (NYSE:RGA) released its most recent earnings update. Generally, analyst forecasts seem pessimistic, as a -57.39% fall in profits is expected in the upcoming year against the past 5-year average growth rate of 8.77%. Presently, with earnings at US$1.82B, we should see this fall to US$776.45M by 2019. Below is a brief commentary around Reinsurance Group of America’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here. Check out our latest analysis for Reinsurance Group of America

Exciting times ahead?

The 6 analysts covering RGA view its longer term outlook with a negative 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 RGA’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.

By 2021, RGA’s earnings should reach US$969.75M, from current levels of US$1.82B, resulting in an annual growth rate of -20.36%. EPS reaches $15 in the final year of forecast compared to the current $28.28 EPS today. Fall in earnings appears to be a result of cost growth exceeding top-line growth of 3.51% in the next three years. Furthermore, the current 14.56% margin is expected to contract to 6.98% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Reinsurance Group of America, I’ve compiled three essential aspects you should further research:

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 Reinsurance Group of America 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 Reinsurance Group of America is currently mispriced by the market.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Reinsurance Group of America? 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 pass 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.