On 30 September 2018, Life Storage Inc (NYSE:LSI) announced its earnings update. Overall, analysts seem cautiously optimistic, with earnings expected to grow by 13% in the upcoming year against the past 5-year average growth rate of 7.8%. Currently with trailing-twelve-month earnings of US$135m, we can expect this to reach US$153m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Life Storage in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term expectations from the 6 analysts of LSI is tilted towards the 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 get an idea of the overall earnings growth trend for LSI, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 4.4% based on the most recent earnings level of US$96m to the final forecast of US$118m by 2021. EPS reaches $3.54 in the final year of forecast compared to the current $2.08 EPS today. The main reason for growth is a result of a high top-line growth of 4.9% falling down into the bottom line. Analysts are predicting earnings growth to outpace revenue by the end of 2021, resulting in a margin expansion from 19% to 20%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Life Storage, there are three pertinent 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 Life Storage 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 Life Storage is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Life Storage? 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 email@example.com.