Analysts Just Shaved Their Finance Of America Companies Inc. (NYSE:FOA) Forecasts Dramatically
The analysts covering Finance Of America Companies Inc. (NYSE:FOA) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the latest downgrade, the four analysts covering Finance Of America Companies provided consensus estimates of US$1.1b revenue in 2022, which would reflect a definite 8.9% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 98% to US$0.17. Prior to this update, the analysts had been forecasting revenues of US$1.3b and earnings per share (EPS) of US$0.41 in 2022. So we can see that the consensus has become notably more bearish on Finance Of America Companies' outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
See our latest analysis for Finance Of America Companies
The consensus price target fell 10% to US$3.44, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Finance Of America Companies analyst has a price target of US$5.00 per share, while the most pessimistic values it at US$1.75. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would also point out that the forecast 17% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 39% annually over the past year Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 9.8% annually. So while a broad number of companies are forecast to grow, unfortunately Finance Of America Companies is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Finance Of America Companies to become unprofitable this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Finance Of America Companies' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Finance Of America Companies analysts - going out to 2024, and you can see them 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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