Looking at Primary Health Properties Plc's (LON:PHP) earnings update in December 2018, analyst forecasts seem fairly subdued, as a 15% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 23%. With trailing-twelve-month net income at current levels of UK£74m, we should see this rise to UK£85m in 2020. Below is a brief commentary on the longer term outlook the market has for Primary Health Properties. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is Primary Health Properties going to perform in the near future?
Over the next three years, it seems the consensus view of the 7 analysts covering PHP is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of PHP'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 UK£74m and the final forecast of UK£123m by 2022, the annual rate of growth for PHP’s earnings is 17%. This leads to an EPS of £0.11 in the final year of projections relative to the current EPS of £0.10. However, the expansion of the current 93% margin is not expected to be sustained, as it begins to contract to 88% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Primary Health Properties, there are three important factors you should further examine:
- 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 Primary Health Properties 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 Primary Health Properties is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Primary Health Properties? 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.