On 31 December 2018, Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced its latest earnings update. Overall, analyst consensus outlook seem bearish, as a -7.7% fall in profits is expected in the upcoming year against the past 5-year average growth rate of 9.6%. With trailing-twelve-month net income at current levels of US$42m, the consensus growth rate suggests that earnings will decline to US$39m by 2020. Below is a brief commentary on the longer term outlook the market has for Retail Opportunity Investments. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Retail Opportunity Investments in the longer term?
Over the next three years, it seems the consensus view of the 7 analysts covering ROIC is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly 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 ROIC’s earnings growth over these next few years.
By 2022, ROIC’s earnings should reach US$47m, from current levels of US$42m, resulting in an annual growth rate of 2.3%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $0.36 in the final year of forecast compared to the current $0.38 EPS today. Margins are currently sitting at 14%, which is expected to expand to 15% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Retail Opportunity Investments, I’ve compiled three fundamental factors you should further research:
- 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 Retail Opportunity Investments 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 Retail Opportunity Investments is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Retail Opportunity Investments? 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 firstname.lastname@example.org. 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.