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Rural Funds Group (ASX:RFF): What Does The Future Look Like?

Simply Wall St

As Rural Funds Group (ASX:RFF) announced its earnings release on 30 June 2019, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 45% next year relative to the past 5-year average growth rate of 19%. Presently, with latest-twelve-month earnings at AU$32m, we should see this growing to AU$47m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Rural Funds Group in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Rural Funds Group

Can we expect Rural Funds Group to keep growing?

The longer term expectations from the 3 analysts of RFF is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for RFF, 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.

ASX:RFF Past and Future Earnings, August 28th 2019

This results in an annual growth rate of 18% based on the most recent earnings level of AU$32m to the final forecast of AU$52m by 2022. This leads to an EPS of A$0.15 in the final year of projections relative to the current EPS of A$0.099. In 2022, RFF's profit margin will have expanded from 47% to 64%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Rural Funds Group, I've compiled three key 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 Rural Funds Group 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 Rural Funds Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Rural Funds Group? 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.