In December 2018, Ready Capital Corporation (NYSE:RC) released its earnings update. Generally, analyst consensus outlook appear cautiously subdued, as a 18% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 27%. With trailing-twelve-month net income at current levels of US$59m, we should see this rise to US$70m in 2020. Below is a brief commentary on the longer term outlook the market has for Ready Capital. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How is Ready Capital going to perform in the near future?
The longer term expectations from the 6 analysts of RC is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of RC's earnings growth over these next few years.
From the current net income level of US$59m and the final forecast of US$64m by 2022, the annual rate of growth for RC’s earnings is 9.1%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $1.74 in the final year of forecast compared to the current $1.84 EPS today. With a current profit margin of 28%, this movement will result in a margin of 32% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Ready Capital, I've compiled three relevant 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 Ready Capital 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 Ready Capital is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Ready Capital? 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.