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Will Equity Residential's (NYSE:EQR) Earnings Grow In The Year Ahead?

Simply Wall St

After Equity Residential's (NYSE:EQR) earnings announcement on 31 March 2019, the consensus outlook from analysts appear bearish, with profits predicted to drop by 9.5% next year against the past 5-year average growth rate of 0.4%. Currently with a trailing-twelve-month profit of US$654m, the consensus growth rate suggests that earnings will drop to US$593m by 2020. Below is a brief commentary around Equity Residential's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

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See our latest analysis for Equity Residential

Exciting times ahead?

The view from 19 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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.

NYSE:EQR Past and Future Earnings, May 17th 2019

By 2022, EQR's earnings should reach US$676m, from current levels of US$654m, resulting in an annual growth rate of 3.6%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $1.58 in the final year of forecast compared to the current $1.78 EPS today. However, the expansion of the current 25% margin is not expected to be sustained, as it begins to contract to 24% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Equity Residential, I've put together three important aspects 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 Equity Residential 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 Equity Residential is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Equity Residential? 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.