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Secure Income REIT Plc (LON:SIR): Earnings Growth Remains Elusive

Simply Wall St

In December 2018, Secure Income REIT Plc (LON:SIR) announced its most recent earnings update, which signalled that the business gained from a small tailwind, leading to a single-digit earnings growth of 7.5%. Today I want to provide a brief commentary on how market analysts predict Secure Income REIT's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

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View our latest analysis for Secure Income REIT

Market analysts' consensus outlook for next year seems pessimistic, with earnings falling by -6.2%. Beyond this, earnings are predicted to continue to be below today's level, with a fall of -19% in 2021, eventually reaching UK£120m in 2022.

AIM:SIR Past and Future Earnings, May 20th 2019

Even though it’s helpful to understand the rate of growth each year relative to today’s value, it may be more beneficial to gauge the rate at which the business is moving every year, on average. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Secure Income REIT's earnings trajectory over time, fluctuate up and down. 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 -6.5%. This means that, we can anticipate Secure Income REIT will chip away at a rate of -6.5% every year for the next few years.

Next Steps:

For Secure Income REIT, I've compiled three important factors you should further research:

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