What Should We Expect From Ares Commercial Real Estate Corporation’s (NYSE:ACRE) Earnings Over The Next Few Years?

The latest earnings update Ares Commercial Real Estate Corporation’s (NYSE:ACRE) released in December 2017 showed that the business gained from a robust tailwind, eventuating to a double-digit earnings growth of 17.32%. Below, I’ve laid out key growth figures on how market analysts predict Ares Commercial Real Estate’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. Check out our latest analysis for Ares Commercial Real Estate

Market analysts’ prospects for the upcoming year seems positive, with earnings increasing by a robust 12.92%. This growth seems to continue into the following year with rates arriving at double digit 16.64% compared to today’s earnings, and finally hitting US$43.68M by 2021.

NYSE:ACRE Future Profit Apr 30th 18
NYSE:ACRE Future Profit Apr 30th 18

Even though it is useful to be aware of the rate of growth each year relative to today’s value, it may be more beneficial to evaluate the rate at which the business is growing every year, on average. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Ares Commercial Real Estate’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 9.33%. This means that, we can anticipate Ares Commercial Real Estate will grow its earnings by 9.33% every year for the next couple of years.

Next Steps:

For Ares Commercial Real Estate, there are three fundamental factors you should further research:

  1. 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.
  2. Valuation: What is ACRE 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 ACRE is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ACRE? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!