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Community Healthcare Trust Incorporated Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models

Simply Wall St
·4 min read

Last week, you might have seen that Community Healthcare Trust Incorporated (NYSE:CHCT) released its annual result to the market. The early response was not positive, with shares down 5.5% to US$48.85 in the past week. Statutory earnings per share fell badly short of expectations, coming in at US$0.37, some 21% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$61m. 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've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.

View our latest analysis for Community Healthcare Trust

NYSE:CHCT Past and Future Earnings, February 28th 2020
NYSE:CHCT Past and Future Earnings, February 28th 2020

Taking into account the latest results, the latest consensus from Community Healthcare Trust's seven analysts is for revenues of US$73.7m in 2020, which would reflect a huge 21% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to bounce 99% to US$0.74. In the lead-up to this report, analysts had been modelling revenues of US$78.6m and earnings per share (EPS) of US$0.60 in 2020. While revenue forecasts have been revised downwards, analysts look to have become more optimistic on the company's earnings power, given the sizeable expansion in to earnings per share forecasts.

There's been no real change to the average price target of US$49.88, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. 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$57.00 per share, while the most pessimistic values it at US$42.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Further, we can compare these estimates to past performance, and see how Community Healthcare Trust forecasts compare to the wider market's forecast performance. We would highlight that Community Healthcare Trust's revenue growth is expected to slow, with forecast 21% increase next year well below the historical 30%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.9% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkCommunity Healthcare Trust will grow faster than the wider market.

The Bottom Line

The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Community Healthcare Trust following these results. Unfortunately analysts also downgraded their revenue estimates, although industry data suggests that Community Healthcare Trust's revenues are expected to grow faster than the wider market. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at US$49.88, with the latest estimates not enough to have an impact on analysts' estimated valuations.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Community Healthcare Trust analysts - going out to 2024, and you can see them free on our platform here.

It might also be worth considering whether Community Healthcare Trust's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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.