Based on Agree Realty Corporation’s (NYSE:ADC) earnings update in March 2019, the consensus outlook from analysts appear somewhat bearish, as a 20% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 24%. Presently, with latest-twelve-month earnings at US$58m, we should see this growing to US$70m by 2020. Below is a brief commentary around Agree Realty’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Agree Realty to keep growing?
The longer term view from the 5 analysts covering ADC is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, ADC’s earnings should reach US$92m, from current levels of US$58m, resulting in an annual growth rate of 15%. This leads to an EPS of $1.92 in the final year of projections relative to the current EPS of $1.81. However, the expansion of the current 39% margin is not expected to be sustained, as it begins to contract to 38% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Agree Realty, I’ve compiled three essential factors you should look at:
- 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.
- Valuation: What is Agree Realty 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 Agree Realty is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Agree Realty? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.