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The latest analyst coverage could presage a bad day for Sun Communities, Inc. (NYSE:SUI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, Sun Communities' three analysts currently expect revenues in 2021 to be US$1.4b, approximately in line with the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$1.7b in 2021. The consensus view seems to have become more pessimistic on Sun Communities, noting the measurable cut to revenue estimates in this update.
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 Sun Communities' revenue growth is expected to slow, with the forecast 0.4% annualised growth rate until the end of 2021 being well below the historical 13% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that Sun Communities is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Sun Communities after today.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Sun Communities' business, like dilutive stock issuance over the past year. Learn more, and discover the 2 other concerns we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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