The latest analyst coverage could presage a bad day for Broadmark Realty Capital Inc. (NYSE:BRMK), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After this downgrade, Broadmark Realty Capital's three analysts are now forecasting revenues of US$121m in 2022. This would be a notable 9.6% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 3.5% to US$0.63. Before this latest update, the analysts had been forecasting revenues of US$143m and earnings per share (EPS) of US$0.76 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a considerable drop in earnings per share numbers as well.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Broadmark Realty Capital's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2022 being well below the historical 27% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.8% per year. Even after the forecast slowdown in growth, it seems obvious that Broadmark Realty Capital is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Broadmark Realty Capital, and we wouldn't blame shareholders for feeling a little more cautious themselves.
There might be good reason for analyst bearishness towards Broadmark Realty Capital, like the risk of cutting its dividend. For more information, you can click here to discover this and the 1 other warning sign we've identified.
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