Based on EastGroup Properties, Inc.’s (NYSE:EGP) earnings update in December 2018, analyst consensus outlook appear bearish, as a -9.0% fall in profits is expected in the upcoming year compared with the past 5-year average growth rate of 19%. Presently, with latest-twelve-month earnings at US$89m, we should see this fall to US$81m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect EastGroup Properties to keep growing?
The longer term view from the 8 analysts covering EGP 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. 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 EGP’s earnings growth over these next few years.
By 2022, EGP’s earnings should reach US$84m, from current levels of US$89m, resulting in an annual growth rate of 1.4%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $2.2 in the final year of forecast compared to the current $2.5 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 29% to 23% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For EastGroup Properties, 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 EastGroup Properties 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 EastGroup Properties is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of EastGroup Properties? 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.