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Since STORE Capital Corporation (NYSE:STOR) released its earnings in March 2019, analyst forecasts seem fairly subdued, with earnings expected to grow by 5.5% in the upcoming year against the higher past 5-year average growth rate of 34%. With trailing-twelve-month net income at current levels of US$217m, we should see this rise to US$229m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect STORE Capital to keep growing?
The longer term view from the 8 analysts covering STOR is one of 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 STOR, 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.
By 2022, STOR's earnings should reach US$289m, from current levels of US$217m, resulting in an annual growth rate of 11%. This leads to an EPS of $1.08 in the final year of projections relative to the current EPS of $1.06. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 40% to 36% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For STORE Capital, I've compiled three essential aspects you should look at:
- 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 STORE 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 STORE Capital is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of STORE 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 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.