Shareholders will be ecstatic, with their stake up 29% over the past week following Healthcare Services Group, Inc.'s (NASDAQ:HCSG) latest full-year results. It looks like a credible result overall - although revenues of US$1.7b were what the analysts expected, Healthcare Services Group surprised by delivering a (statutory) profit of US$0.52 per share, an impressive 38% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Healthcare Services Group from four analysts is for revenues of US$1.73b in 2024. If met, it would imply a credible 3.5% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 52% to US$0.79. In the lead-up to this report, the analysts had been modelling revenues of US$1.74b and earnings per share (EPS) of US$0.73 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 14% to US$14.50. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Healthcare Services Group analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$13.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing stands out from these estimates, which is that Healthcare Services Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 3.5% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.6% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.8% per year. Although Healthcare Services Group's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Healthcare Services Group following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 Healthcare Services Group going out to 2026, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
