American Homes 4 Rent (NYSE:AMH) shares fell 8.9% to US$25.89 in the week since its latest full-year results. The result was positive overall - although revenues of US$1.1b were in line with what analysts predicted, American Homes 4 Rent surprised by delivering a statutory profit of US$0.29 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
After the latest results, the six analysts covering American Homes 4 Rent are now predicting revenues of US$1.19b in 2020. If met, this would reflect an okay 3.9% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to sink 20% to US$0.23 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.21b and earnings per share (EPS) of US$0.23 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of US$28.93, showing that the business is executing well and in line with expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values American Homes 4 Rent at US$30.00 per share, while the most bearish prices it at US$27.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
In addition, we can look to American Homes 4 Rent's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that American Homes 4 Rent's revenue growth is expected to slow, with forecast 3.9% increase next year well below the historical 17%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 5.0% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect American Homes 4 Rent to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that American Homes 4 Rent's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$28.93, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple American Homes 4 Rent analysts - going out to 2022, and you can see them free on our platform here.
You can also view our analysis of American Homes 4 Rent's balance sheet, and whether we think American Homes 4 Rent is carrying too much debt, for free on our platform here.
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