Green Brick Partners, Inc. (NASDAQ:GRBK) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$213m, some 2.3% above estimates, and statutory earnings per share (EPS) coming in at US$0.31, 30% ahead of expectations. The 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Green Brick Partners from two analysts is for revenues of US$869.1m in 2020 which, if met, would be an okay 3.9% increase on its sales over the past 12 months. Statutory earnings per share are predicted to rise 9.5% to US$1.34. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$915.1m and earnings per share (EPS) of US$1.21 in 2020. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the decent improvement in to the earnings per share numbers.
There's been no real change to the average price target of US$10.50, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe.
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. We would highlight that Green Brick Partners' revenue growth is expected to slow, with forecast 3.9% increase next year well below the historical 24%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.3% next year. Even after the forecast slowdown in growth, it seems obvious that Green Brick Partners is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Green Brick Partners following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Green Brick Partners going out as far as 2021, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Green Brick Partners (1 can't be ignored!) that we have uncovered.
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