First Real Estate Investment Trust’s (OTCPK:FESN.F) latest earnings announcement in December 2018 confirmed that the business benefited from a small tailwind, eventuating to a single-digit earnings growth of 3.5%. Below is a brief commentary on my key takeaways on how market analysts predict First Real Estate Investment Trust’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for next year seems pessimistic, with earnings falling by -9.1%. In the next couple of years, earnings are predicted to continue to be below today’s level, with a reduction of -7.3% in 2021, eventually reaching S$67m in 2022.
Even though it’s informative understanding the growth rate each year relative to today’s value, it may be more beneficial gauging the rate at which the earnings are rising or falling on average every year. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of First Real Estate Investment Trust’s earnings trajectory over time, be more volatile. To calculate this rate, I put 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 -3.1%. This means that, we can anticipate First Real Estate Investment Trust will chip away at a rate of -3.1% every year for the next couple of years.
For First Real Estate Investment Trust, there are three key 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 FESN.F 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 FESN.F is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FESN.F? 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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