The latest earnings announcement EastGroup Properties, Inc. (NYSE:EGP) released in December 2018 suggested that the company benefited from a small tailwind, leading to a single-digit earnings growth of 6.4%. Below is a brief commentary on my key takeaways on how market analysts perceive EastGroup Properties’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings decreasing by -8.5%. But in the following year, there is a complete contrast in performance, with earnings growth rates arriving at double digit 11% compared to today’s level before reducing. to US$84m in 2022.
Although it’s useful to understand the growth each year relative to today’s level, it may be more insightful to estimate the rate at which the business is growing on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of EastGroup Properties’s earnings trajectory over time, fluctuate up and down. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 1.4%. This means that, we can assume EastGroup Properties will grow its earnings by 1.4% every year for the next couple of years.
For EastGroup Properties, I’ve compiled three relevant aspects 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 EGP 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 EGP is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EGP? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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