A week ago, Corporate Office Properties Trust (NYSE:OFC) came out with a strong set of annual numbers that could potentially lead to a re-rate of the stock. Corporate Office Properties Trust beat earnings, with revenues hitting US$643m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 13%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Following last week's earnings report, Corporate Office Properties Trust's four analysts are forecasting 2020 revenues to be US$631.0m, approximately in line with the last 12 months. Statutory earnings per share are forecast to nosedive 54% to US$0.79 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$631.0m and earnings per share (EPS) of US$0.75 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$31.21, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Corporate Office Properties Trust analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$23.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Corporate Office Properties Trust shareholders.
Further, we can compare these estimates to past performance, and see how Corporate Office Properties Trust forecasts compare to the wider market's forecast performance. We would highlight that sales are expected to reverse, with the forecast 1.8% revenue decline a notable change from historical growth of 0.3% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.9% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Corporate Office Properties Trust to grow slower 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 Corporate Office Properties Trust following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Corporate Office Properties Trust's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$31.21, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Corporate Office Properties Trust. Long-term earnings power is much more important than next year's profits. We have forecasts for Corporate Office Properties Trust going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Corporate Office Properties Trust's balance sheet, and whether we think Corporate Office Properties Trust is carrying too much debt, for free on our platform here.
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