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MGM Growth Properties LLC (NYSE:MGP): Are Analysts Bullish?

Simply Wall St

The latest earnings update MGM Growth Properties LLC (NYSE:MGP) released in December 2018 showed that the business benefited from a large tailwind, eventuating to a high double-digit earnings growth of 61%. Investors may find it useful to understand how market analysts predict MGM Growth Properties’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. 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.

Check out our latest analysis for MGM Growth Properties

Analysts’ expectations for next year seems positive, with earnings rising by a robust 37%. This growth seems to continue into the following year with rates arriving at double digit 48% compared to today’s earnings, and finally hitting US$109m by 2022.

NYSE:MGP Past and Future Earnings, February 27th 2019

Even though it is helpful to understand the growth year by year relative to today’s figure, it may be more valuable to estimate the rate at which the company is rising or falling every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of MGM Growth Properties’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 15%. This means, we can presume MGM Growth Properties will grow its earnings by 15% every year for the next few years.

Next Steps:

For MGM Growth Properties, there are three fundamental aspects you should further examine:

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