Want to participate in a short research study? Help shape the future of investing tools and receive a $20 prize!
In December 2018, Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced its most recent earnings update, which revealed that the company experienced a robust tailwind, leading to a double-digit earnings growth of 11%. Today I want to provide a brief commentary on how market analysts predict Retail Opportunity Investments’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.
Analysts’ expectations for the coming year seems pessimistic, with earnings reducing by -5.1%. But in the following year, there’s contrast in performance, with earnings growth rates generating double digit 2.3% compared to today’s level before falling. to US$39m in 2022.
While it’s helpful to be aware of the growth each year relative to today’s value, it may be more valuable to gauge the rate at which the company is moving every year, on average. The benefit of this method is that we can get a bigger picture of the direction of Retail Opportunity Investments’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -0.4%. This means, we can anticipate Retail Opportunity Investments will chip away at a rate of -0.4% every year for the next few years.
For Retail Opportunity Investments, there are three key aspects you should further examine:
- 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 ROIC 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 ROIC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ROIC? 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.