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In December 2018, Apple Hospitality REIT, Inc. (NYSE:APLE) announced its latest earnings update, which suggested that the company benefited from a robust tailwind, eventuating to a double-digit earnings growth of 13%. Below is my commentary, albeit very simple and high-level, on how market analysts view Apple Hospitality REIT's earnings growth trajectory over the next few 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.
Market analysts' consensus outlook for the coming year seems pessimistic, with earnings declining by a double-digit -11%. Over the medium term, earnings are predicted to continue to be below today's level, with a decline of -13% in 2021, eventually reaching US$179m in 2022.
Even though it is useful to understand the growth each year relative to today’s value, it may be more insightful to evaluate the rate at which the earnings are growing on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Apple Hospitality REIT's earnings trajectory over time, be more volatile. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -2.6%. This means, we can expect Apple Hospitality REIT will chip away at a rate of -2.6% every year for the next couple of years.
For Apple Hospitality REIT, I've compiled three fundamental factors you should further research:
- 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 APLE 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 APLE is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of APLE? 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.