On 31 December 2018, Realty Income Corporation (NYSE:O) released its earnings update. Generally, the consensus outlook from analysts appear in-line with historical trends, with earnings growth rate expected to be 15% in the upcoming year, relative to the past five-year average earnings growth of 14% per year. By 2020, we can expect Realty Income’s bottom line to reach US$419m, a jump from the current trailing-twelve-month of US$364m. Below is a brief commentary around Realty Income’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Realty Income perform in the near future?
The 11 analysts covering O view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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.
By 2022, O’s earnings should reach US$455m, from current levels of US$364m, resulting in an annual growth rate of 8.7%. EPS reaches $1.38 in the final year of forecast compared to the current $1.26 EPS today. Margins are currently sitting at 27%, approximately the same as previous years. With analysts forecasting revenue growth of 0.26235 and O’s net income growth expected to roughly track that, this company may add value for shareholders over time.
Future outlook is only one aspect when you’re building an investment case for a stock. For Realty Income, there are three important 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 Realty Income 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 Realty Income is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Realty Income? 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.