The latest analyst coverage could presage a bad day for Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the latest downgrade, the seven analysts covering Fortress Transportation and Infrastructure Investors provided consensus estimates of US$429m revenue in 2020, which would reflect a painful 26% decline on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of US$0.34 in 2020, a sharp decline from a profit over the last year. Before this latest update, the analysts had been forecasting revenues of US$557m and earnings per share (EPS) of US$0.33 in 2020. There looks to have been a major change in sentiment regarding Fortress Transportation and Infrastructure Investors' prospects, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.
The consensus price target fell 9.4% to US$16.40, implicitly signalling that lower earnings per share are a leading indicator for Fortress Transportation and Infrastructure Investors' 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. Currently, the most bullish analyst values Fortress Transportation and Infrastructure Investors at US$24.00 per share, while the most bearish prices it at US$12.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 26%, a significant reduction from annual growth of 37% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.8% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Fortress Transportation and Infrastructure Investors is expected to lag the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Fortress Transportation and Infrastructure Investors dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Fortress Transportation and Infrastructure Investors' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Fortress Transportation and Infrastructure Investors' business, like concerns around earnings quality. Learn more, and discover the 2 other concerns we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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