After AmerisourceBergen Corporation's (NYSE:ABC) earnings announcement in March 2019, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 26% in the upcoming year, though this is noticeably lower than the historical 5-year average earnings growth of 32%. Currently with trailing-twelve-month earnings of US$1.7b, we can expect this to reach US$2.1b by 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 AmerisourceBergen going to perform in the near future?
The longer term expectations from the 15 analysts of ABC is tilted 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 ABC, 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 US$1.7b and the final forecast of US$2.7b by 2022, the annual rate of growth for ABC’s earnings is 13%. EPS reaches $7.71 in the final year of forecast compared to the current $7.61 EPS today. With a current profit margin of 1.0%, this movement will result in a margin of 1.4% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For AmerisourceBergen, there are three essential aspects 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 AmerisourceBergen 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 AmerisourceBergen is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of AmerisourceBergen? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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