The latest earnings update Alexandria Real Estate Equities, Inc. (NYSE:ARE) released in December 2018 revealed that the business gained from a substantial tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key growth figures on how market analysts view Alexandria Real Estate Equities’s earnings growth trajectory over the next few 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.
Analysts’ expectations for the coming year seems pessimistic, with earnings declining by a double-digit -25%. In the next couple of years, earnings are expected to continue to be below today’s level, with a decline of -15% in 2021, eventually reaching US$309m in 2022.
Even though it is useful to be aware of the growth rate each year relative to today’s value, it may be more beneficial analyzing the rate at which the business is rising or falling every year, on average. The benefit of this method is that we can get a bigger picture of the direction of Alexandria Real Estate Equities’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To compute 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 -8.4%. This means that, we can assume Alexandria Real Estate Equities will chip away at a rate of -8.4% every year for the next couple of years.
For Alexandria Real Estate Equities, I’ve compiled three key aspects you should look at:
- 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 ARE 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 ARE is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ARE? 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 firstname.lastname@example.org. 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.