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Viva Energy REIT's (ASX:VVR) most recent earnings announcement in February 2019 showed that the company endured a minor headwind with earnings deteriorating from AU$170m to AU$167m, a change of -2.0%. Investors may find it useful to understand how market analysts predict Viva Energy REIT's earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts' consensus outlook for the upcoming year seems pessimistic, with earnings falling by a double-digit -21%. Over the medium term, earnings are predicted to continue to be below today's level, with a decline of -17% in 2021, eventually reaching AU$139m in 2022.
Even though it is informative knowing the rate of growth year by year relative to today’s value, it may be more valuable gauging the rate at which the company is growing on average every year. The pro of this technique is that we can get a better picture of the direction of Viva Energy REIT's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've inserted 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 -3.8%. This means, we can presume Viva Energy REIT will chip away at a rate of -3.8% every year for the next couple of years.
For Viva Energy REIT, I've put together three essential aspects 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 VVR 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 VVR is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of VVR? 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 firstname.lastname@example.org. 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.