Ryman Healthcare Limited (NZSE:RYM): Are Analysts Bullish?

Ryman Healthcare Limited’s (NZSE:RYM) latest earnings announcement in March 2018 confirmed that the business experienced a small tailwind, eventuating to a single-digit earnings growth of 8.8%. Below, I’ve laid out key numbers on how market analysts perceive Ryman Healthcare’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

See our latest analysis for Ryman Healthcare

Analysts’ expectations for the upcoming year seems pessimistic, with earnings falling by a double-digit -22%. Beyond this, earnings are expected to continue to be below today’s level, with a decline of -12% in 2020, eventually reaching NZ$341m in 2021.

NZSE:RYM Future Profit October 15th 18

While it is useful to understand the growth year by year relative to today’s level, it may be more beneficial estimating the rate at which the company is moving on average every year. The advantage of this approach is that we can get a better picture of the direction of Ryman Healthcare’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 9.6%. This means, we can expect Ryman Healthcare will grow its earnings by 9.6% every year for the next few years.

Next Steps:

For Ryman Healthcare, I’ve compiled three relevant factors you should further examine:

1. 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.

2. Valuation: What is RYM 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 RYM is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RYM? 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.