Yahoo Finance What Are Analysts Saying About The Future Of Medibank Private Limited’s (ASX:MPL)?
In June 2018, Medibank Private Limited (ASX:MPL) announced its earnings update. Overall, analyst consensus outlook appear cautiously subdued, as a 2.5% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 19.9%. With trailing-twelve-month net income at current levels of AU$445.1m, we should see this rise to AU$456.0m in 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
See our latest analysis for Medibank Private
Can we expect Medibank Private to keep growing?
Longer term expectations from the 12 analysts covering MPL’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of MPL’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 AU$445.1m and the final forecast of AU$440.1m by 2021, the annual rate of growth for MPL’s earnings is 0.3%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of A$0.16 in the final year of forecast compared to the current A$0.16 EPS today. Earnings growth appears to be a result of revenue expansion of 2.5% exceeeding cost growth over time. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 6.3% to 5.8% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Medibank Private, I’ve put together three key aspects you should look at:
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 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.
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!
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
