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American Assets Trust, Inc. (NYSE:AAT) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was not a great result overall. Although revenues beat expectations, hitting US$359m, statutory earnings missed analyst forecasts by 14%, coming in at just US$0.46 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the four analysts covering American Assets Trust provided consensus estimates of US$343.4m revenue in 2021, which would reflect a measurable 4.4% decline on its sales over the past 12 months. Statutory earnings per share are expected to nosedive 44% to US$0.26 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$349.1m and earnings per share (EPS) of US$0.75 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
The average price target fell 28% to US$30.35, with reduced earnings forecasts clearly tied to a lower valuation estimate. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic American Assets Trust analyst has a price target of US$33.00 per share, while the most pessimistic values it at US$27.40. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 4.4% revenue decline a notable change from historical growth of 6.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - American Assets Trust is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple American Assets Trust analysts - going out to 2022, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for American Assets Trust (1 is significant) you should be aware of.
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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