Based on Freehold Royalties Ltd.'s (TSE:FRU) earnings update in December 2018, the consensus outlook from analysts appear fairly confident, as a -31% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -43%. By 2020, we can expect Freehold Royalties’s bottom line to reach CA$9.7m, a jump from the current trailing-twelve-month of CA$14m. Below is a brief commentary around Freehold Royalties's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Freehold Royalties going to perform in the near future?
The longer term expectations from the 4 analysts of FRU is tilted towards the 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.
By 2022, FRU's earnings should reach CA$14m, from current levels of CA$14m, resulting in an annual growth rate of 0.08%. This leads to an EPS of CA$0.17 in the final year of projections relative to the current EPS of CA$0.12. With a current profit margin of 9.7%, this movement will result in a margin of 10% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Freehold Royalties, I've put together three fundamental 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 Freehold Royalties 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 Freehold Royalties is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Freehold Royalties? 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.