HCA Healthcare, Inc. (NYSE:HCA) shareholders are probably feeling a little disappointed, since its shares fell 4.0% to US$131 in the week after its latest quarterly results. Statutory earnings per share of US$1.95 unfortunately missed expectations by 19%, although it was encouraging to see revenues of US$13b exceed expectations by 3.1%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year. NYSE:HCA Earnings and Revenue Growth October 28th 2020
Following the latest results, HCA Healthcare's 18 analysts are now forecasting revenues of US$54.2b in 2021. This would be a reasonable 6.7% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 18% to US$11.89. In the lead-up to this report, the analysts had been modelling revenues of US$54.9b and earnings per share (EPS) of US$11.71 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$153, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic HCA Healthcare analyst has a price target of US$172 per share, while the most pessimistic values it at US$135. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of HCA Healthcare'shistorical trends, as next year's 6.7% revenue growth is roughly in line with 5.9% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 6.9% per year. It's clear that while HCA Healthcare's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for HCA Healthcare going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for HCA Healthcare you should know about.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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