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AIMS APAC REIT (SGX:O5RU): Is It A Good Long Term Opportunity?

Simply Wall St

The most recent earnings announcement AIMS APAC REIT's (SGX:O5RU) released in March 2019 showed that the company faced a immense headwind with earnings falling by -18%. Today I want to provide a brief commentary on how market analysts view AIMS APAC REIT's earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for AIMS APAC REIT

Analysts' outlook for the upcoming year seems optimistic, with earnings rising by a robust 31%. This growth seems to continue into the following year with rates reaching double digit 35% compared to today’s earnings, and finally hitting S$68m by 2022.

SGX:O5RU Past and Future Earnings, April 26th 2019

Although it is informative knowing the growth rate each year relative to today’s value, it may be more insightful to estimate the rate at which the company is rising or falling on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of AIMS APAC REIT's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've appended 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 10%. This means, we can assume AIMS APAC REIT will grow its earnings by 10% every year for the next couple of years.

Next Steps:

For AIMS APAC REIT, there are three essential factors 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 O5RU 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 O5RU is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of O5RU? 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 editorial-team@simplywallst.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.