Primary Health Properties Plc’s (LON:PHP) latest earnings announcement in December 2018 suggested that the company experienced a significant headwind with earnings falling by -19%. Today I want to provide a brief commentary on how market analysts perceive Primary Health Properties’s earnings growth trajectory over the next couple of 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.
Analysts’ outlook for this coming year seems rather muted, with earnings expanding by a single digit 7.9%. The growth outlook in the following year seems much more positive with rates generating double digit 34% compared to today’s earnings, and finally hitting UK£115m by 2022.
Even though it’s helpful to understand the growth rate year by year relative to today’s value, it may be more beneficial estimating the rate at which the business is moving on average every year. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Primary Health Properties’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 15%. This means, we can assume Primary Health Properties will grow its earnings by 15% every year for the next few years.
For Primary Health Properties, there are three fundamental factors you should further research:
- 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.
- Valuation: What is PHP 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 PHP is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PHP? 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 email@example.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.