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Analysts Are Updating Their Community Healthcare Trust Incorporated (NYSE:CHCT) Estimates After Its First-Quarter Results

Simply Wall St
·4 min read

Community Healthcare Trust Incorporated (NYSE:CHCT) shareholders are probably feeling a little disappointed, since its shares fell 3.0% to US$36.13 in the week after its latest quarterly results. It was a pretty mixed result, with revenues beating expectations to hit US$18m. Statutory earnings fell 2.7% short of analyst forecasts, reaching US$0.18 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Community Healthcare Trust

NYSE:CHCT Past and Future Earnings May 8th 2020
NYSE:CHCT Past and Future Earnings May 8th 2020

Taking into account the latest results, the consensus forecast from Community Healthcare Trust's five analysts is for revenues of US$75.9m in 2020, which would reflect a solid 16% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 55% to US$0.76. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$73.1m and earnings per share (EPS) of US$0.74 in 2020. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$41.50, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Community Healthcare Trust analyst has a price target of US$52.00 per share, while the most pessimistic values it at US$33.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Community Healthcare Trust's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Community Healthcare Trust's revenue growth will slow down substantially, with revenues next year expected to grow 16%, compared to a historical growth rate of 26% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.6% next year. So it's pretty clear that, while Community Healthcare Trust's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Community Healthcare Trust following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 forecasts for Community Healthcare Trust going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 4 warning signs for Community Healthcare Trust (1 is concerning!) that you should be aware of.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.