In This Article:
Looking at Rural Funds Group’s (ASX:RFF) earnings update in June 2018, analyst consensus outlook appear cautiously optimistic, with earnings growth rate expected to be 33% in the upcoming year, relative to the past five-year average earnings growth of 33% per year. Presently, with latest-twelve-month earnings at AU$36m, we should see this growing to AU$48m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Rural Funds Group in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
View our latest analysis for Rural Funds Group
How is Rural Funds Group going to perform in the near future?
Over the next three years, it seems the consensus view of the 3 analysts covering RFF is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of RFF’s earnings growth over these next few years.
This results in an annual growth rate of 14% based on the most recent earnings level of AU$36m to the final forecast of AU$57m by 2021. EPS reaches A$0.16 in the final year of forecast compared to the current A$0.14 EPS today. The main reason for growth is a result of cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, RFF’s profit margin will have expanded from 69% to 76%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Rural Funds Group, I’ve compiled three relevant aspects you should further research:
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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.
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Valuation: What is Rural Funds Group 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 Rural Funds Group is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Rural Funds Group? 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.