Since STORE Capital Corporation (NYSE:STOR) released its earnings in June 2018, it seems that analyst expectations are fairly bearish, as a 14.0% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 38.4%. Presently, with latest-twelve-month earnings at US$181.3m, we should see this growing to US$206.8m by 2019. Below is a brief commentary around STORE Capital’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will STORE Capital perform in the near future?
Longer term expectations from the 8 analysts covering STOR’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of STOR’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 5.7% based on the most recent earnings level of US$161.6m to the final forecast of US$202.3m by 2021. EPS reaches $0.99 in the final year of forecast compared to the current $0.90 EPS today. Earnings growth appears to be a result of a higher revenue growth of 10.0% outpacing cost increases. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 35.7% to 31.6% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For STORE Capital, I’ve compiled three essential aspects 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 STORE Capital 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 STORE Capital is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of STORE Capital? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.