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As you might know, Easterly Government Properties, Inc. (NYSE:DEA) recently reported its annual numbers. Revenues were US$222m, approximately in line with what analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.10, an impressive 25% ahead of estimates. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Easterly Government Properties from four analysts is for revenues of US$247.1m in 2020, which is a decent 11% increase on its sales over the past 12 months. Statutory earnings per share are expected to nosedive 86% to US$0.015 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$246.5m and earnings per share (EPS) of US$0.13 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the large cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$24.60, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Easterly Government Properties analyst has a price target of US$27.00 per share, while the most pessimistic values it at US$23.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to Easterly Government Properties's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect Easterly Government Properties's revenue growth will slow down substantially, with revenues next year expected to grow 11%, compared to a historical growth rate of 33% over the past 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 thinkEasterly Government Properties will grow faster than the wider market.
The Bottom Line
The most important thing to take away is that 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 analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Easterly Government Properties going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Easterly Government Properties's balance sheet, and whether we think Easterly Government Properties is carrying too much debt, for free on our platform here.
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