U.S. Markets closed

What Should We Expect From Realty Income Corporation's (NYSE:O) Earnings Over The Next Few Years?

Simply Wall St

Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!

In December 2018, Realty Income Corporation (NYSE:O) released its most recent earnings announcement, which signalled that the business benefited from a robust tailwind, leading to a double-digit earnings growth of 21%. Below, I've laid out key numbers on how market analysts perceive Realty Income's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

See our latest analysis for Realty Income

Analysts' expectations for the coming year seems buoyant, with earnings increasing by a robust 15%. This growth seems to continue into the following year with rates arriving at double digit 22% compared to today’s earnings, and finally hitting US$473m by 2022.

NYSE:O Past and Future Earnings, April 1st 2019

Even though it is informative knowing the rate of growth each year relative to today’s level, it may be more insightful to estimate the rate at which the company is growing on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of Realty Income's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended 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 8.8%. This means that, we can presume Realty Income will grow its earnings by 8.8% every year for the next couple of years.

Next Steps:

For Realty Income, I've compiled three relevant aspects you should further research:

  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 O 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 O is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of O? 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.