Shareholders might have noticed that Allied Properties Real Estate Investment Trust (TSE:AP.UN) filed its third-quarter result this time last week. The early response was not positive, with shares down 4.1% to CA$32.31 in the past week. Allied Properties Real Estate Investment Trust reported in line with analyst predictions, delivering revenues of CA$140m and statutory earnings per share of CA$5.58, suggesting the business is executing well and in line with its plan. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Allied Properties Real Estate Investment Trust's three analysts are now forecasting revenues of CA$599.0m in 2021. This would be an okay 6.6% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to dive 39% to CA$3.38 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$594.5m and earnings per share (EPS) of CA$4.12 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
The average price target fell 8.7% to CA$46.08, with reduced earnings forecasts clearly tied to a lower valuation estimate. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Allied Properties Real Estate Investment Trust at CA$56.00 per share, while the most bearish prices it at CA$40.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Allied Properties Real Estate Investment Trust's revenue growth is expected to slow, with forecast 6.6% increase next year well below the historical 8.8%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.4% next year. Even after the forecast slowdown in growth, it seems obvious that Allied Properties Real Estate Investment Trust is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Allied Properties Real Estate Investment Trust. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Allied Properties Real Estate Investment Trust's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Allied Properties Real Estate Investment Trust. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Allied Properties Real Estate Investment Trust going out to 2022, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 6 warning signs for Allied Properties Real Estate Investment Trust you should be aware of, and 2 of them are potentially serious.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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