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What Should You Know About CubeSmart's (NYSE:CUBE) Future?

Simply Wall St

After CubeSmart's (NYSE:CUBE) recent earnings announcement in March 2019, it seems that analyst forecasts are fairly pessimistic, with profits predicted to drop by 8.3% next year compared with the past 5-year average growth rate of 40%. Currently with a trailing-twelve-month profit of US$164m, the consensus growth rate suggests that earnings will drop to US$150m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for CubeSmart in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for CubeSmart

Exciting times ahead?

The view from 5 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of CUBE'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.

NYSE:CUBE Past and Future Earnings, July 23rd 2019

By 2022, CUBE's earnings should reach US$176m, from current levels of US$164m, resulting in an annual growth rate of 6.7%. EPS reaches $0.92 in the final year of forecast compared to the current $0.89 EPS today. However, the expansion of the current 27% margin is not expected to be sustained, as it begins to contract to 25% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For CubeSmart, there are three essential factors you should look at:

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