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Digital Realty Trust, Inc. Just Missed Earnings; Here's What Analysts Are Forecasting Now

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Last week, you might have seen that Digital Realty Trust, Inc. (NYSE:DLR) released its quarterly result to the market. The early response was not positive, with shares down 5.4% to US$144 in the past week. The results don't look great, especially considering that the analysts had been forecasting a profit and Digital Realty Trust delivered a statutory loss of US$0.14 per share. Revenues of US$1.0b did beat expectations by 3.2% though. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Digital Realty Trust

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earnings-and-revenue-growth

After the latest results, the 18 analysts covering Digital Realty Trust are now predicting revenues of US$4.29b in 2021. If met, this would reflect a meaningful 18% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to nosedive 41% to US$1.29 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$4.27b and earnings per share (EPS) of US$1.33 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$165, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Digital Realty Trust at US$189 per share, while the most bearish prices it at US$125. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. The analysts are definitely expecting Digital Realty Trust's growth to accelerate, with the forecast 18% growth ranking favourably alongside historical growth of 14% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Digital Realty Trust to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$165, with the latest estimates not enough to have an impact on their price targets.

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. At Simply Wall St, we have a full range of analyst estimates for Digital Realty Trust going out to 2024, and you can see them free on our platform here..

Plus, you should also learn about the 4 warning signs we've spotted with Digital Realty Trust (including 1 which is a bit concerning) .

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.