What Do Analysts Think About The Future Of InfraREIT Inc (REIT)’s (NYSE:HIFR)?

After InfraREIT Inc (REIT)’s (NYSE:HIFR) earnings announcement in June 2018, analyst consensus outlook appear vastly optimistic, with earnings expected to more than double in the upcoming year, compared with the previous 5-year average growth rate of 13.7%. Currently with trailing-twelve-month earnings of US$27.2m, we can expect this to reach US$56.7m by 2019. 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.

See our latest analysis for InfraREIT (REIT)

How will InfraREIT (REIT) perform in the near future?

The 2 analysts covering HIFR view its longer term outlook with a negative sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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.
NYSE:HIFR Future Profit August 30th 18
NYSE:HIFR Future Profit August 30th 18
This results in an annual growth rate of -2.4% based on the most recent earnings level of US$12.3m to the final forecast of US$18.8m by 2021. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of $0.68 in the final year of forecast compared to the current $0.28 EPS today. The primary reason for earnings contraction is due to revenue declining at an average annual rate of -2.5%. With margins currently sitting at 6.5%, this fall in revenues is expected to cause margin expansion to 10.3% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For InfraREIT (REIT), I’ve compiled three relevant aspects you should further examine:

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

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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