Shareholders of Healthcare Services Group, Inc. (NASDAQ:HCSG) will be pleased this week, given that the stock price is up 20% to US$25.30 following its latest third-quarter results. Revenues were US$480m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.36, an impressive 54% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Healthcare Services Group from seven analysts is for revenues of US$2.16b in 2027. If met, it would imply a meaningful 15% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to dive 22% to US$1.22 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.06b and earnings per share (EPS) of US$1.19 in 2027. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Check out our latest analysis for Healthcare Services Group
Despite these upgrades,the analysts have not made any major changes to their price target of US$26.67, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Healthcare Services Group, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$24.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business 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. The analysts are definitely expecting Healthcare Services Group's growth to accelerate, with the forecast 12% annualised growth to the end of 2027 ranking favourably alongside historical growth of 2.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.3% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Healthcare Services Group to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Healthcare Services Group's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Healthcare Services Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Healthcare Services Group going out to 2028, and you can see them free on our platform here.
Even so, be aware that Healthcare Services Group is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
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