On 30 June 2019, Medibank Private Limited (ASX:MPL) released its earnings update. Generally, analyst consensus outlook appear cautiously subdued, as a 0.004% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 16%. With trailing-twelve-month net income at current levels of AU$438m, we should see this rise to AU$438m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is Medibank Private going to perform in the near future?
Over the next three years, it seems the consensus view of the 9 analysts covering MPL is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for MPL, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of AU$438m and the final forecast of AU$452m by 2022, the annual rate of growth for MPL’s earnings is 0.7%. EPS reaches A$0.17 in the final year of forecast compared to the current A$0.16 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 6.5% to 6.2% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Medibank Private, I've put together three important aspects you should look at:
- Valuation: What is Medibank Private 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 Medibank Private is currently mispriced by the market.
- Future Earnings: How does Medibank Private's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Medibank Private? 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 firstname.lastname@example.org. 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.