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In December 2018, Washington Real Estate Investment Trust (NYSE:WRE) released its latest earnings announcement, which suggested that the company experienced a strong tailwind, leading to a double-digit earnings growth of 30%. Below is a brief commentary on my key takeaways on how market analysts view Washington Real Estate Investment Trust'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 this coming year seems pessimistic, with earnings decreasing by a double-digit -16%. However, the next few years seem to illustrate a completely different picture, with expected earnings growth rates arriving at double digit 12% compared to today’s level and continues to increase.
Even though it’s useful to understand the growth rate year by year relative to today’s value, it may be more insightful determining the rate at which the earnings are rising or falling on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Washington Real Estate Investment Trust's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted 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 23%. This means, we can expect Washington Real Estate Investment Trust will grow its earnings by 23% every year for the next few years.
For Washington Real Estate Investment Trust, there are three relevant factors 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 WRE 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 WRE is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WRE? 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 email@example.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.