MFA Financial, Inc.’s (NYSE:MFA) most recent earnings announcement in December 2018 signalled that the company faced a slight headwind with earnings declining from US$306m to US$285m, a change of -6.8%. Below is a brief commentary on my key takeaways on how market analysts view MFA Financial’s earnings growth outlook over the next couple of years and whether the future looks brighter. 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 next year seems positive, with earnings climbing by a robust 17%. This growth seems to continue into the following year with rates reaching double digit 18% compared to today’s earnings and reduces to US$297m by 2022.
Even though it’s informative knowing the growth each year relative to today’s value, it may be more insightful to determine the rate at which the earnings are moving every year, on average. The pro of this method is that we can get a bigger picture of the direction of MFA Financial’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate this rate, I put 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 4.9%. This means that, we can anticipate MFA Financial will grow its earnings by 4.9% every year for the next few years.
For MFA Financial, there are three essential aspects 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 MFA 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 MFA is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MFA? 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.