Century Communities, Inc. (NYSE:CCS) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 12% higher thanthe analysts had forecast, at US$573m, while EPS were US$0.78 beating analyst models by 28%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Century Communities after the latest results.
Following the recent earnings report, the consensus from three analysts covering Century Communities is for revenues of US$2.43b in 2020, implying a noticeable 6.6% decline in sales compared to the last 12 months. Statutory earnings per share are expected to nosedive 30% to US$2.71 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.49b and earnings per share (EPS) of US$2.89 in 2020. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
The average price target climbed 9.6% to US$22.83 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Century Communities at US$30.00 per share, while the most bearish prices it at US$15.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 6.6%, a significant reduction from annual growth of 32% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 1.6% annually for the foreseeable future. It's pretty clear that Century Communities' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Century Communities. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Century Communities. Long-term earnings power is much more important than next year's profits. We have forecasts for Century Communities going out to 2021, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Century Communities (1 is concerning) you should be aware of.
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