What Should We Expect From Welltower Inc.'s (NYSE:WELL) Earnings In The Year Ahead?
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Since Welltower Inc. (NYSE:WELL) released its earnings in December 2018, analyst consensus outlook appear cautiously subdued, as a -7.8% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 17%. Presently, with latest-twelve-month earnings at US$758m, we should see this growing to US$699m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
See our latest analysis for Welltower
What can we expect from Welltower in the longer term?
The 7 analysts covering WELL view its longer term outlook with a negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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.
This results in an annual growth rate of -0.3% based on the most recent earnings level of US$758m to the final forecast of US$772m by 2022. This leads to an EPS of $1.96 in the final year of projections relative to the current EPS of $2.03. The main reason for WELL’s earnings contraction is cost outpacing top line growth of 5.2% over the next few years. Furthermore, the current 16% margin is expected to contract to 15% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Welltower, I've put together three fundamental factors 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 Welltower 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 Welltower is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Welltower? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.
