The interim results for Centuria Metropolitan REIT (ASX:CMA) were released last week, making it a good time to revisit its performance. It was a pretty mixed result, with revenues beating expectations to hit AU$68m. Statutory earnings fell 5.8% short of analyst forecasts, reaching AU$0.16 per share. 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've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Centuria Metropolitan REIT from four analysts is for revenues of AU$150.0m in 2020, which is a solid 17% increase on its sales over the past 12 months. Statutory earnings per share are expected to soar 62% to AU$0.23. Before this earnings report, analysts had been forecasting revenues of AU$150.5m and earnings per share (EPS) of AU$0.34 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
The consensus price target held steady at AU$3.00, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Centuria Metropolitan REIT at AU$3.06 per share, while the most bearish prices it at AU$2.91. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
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 Centuria Metropolitan REIT's revenue growth is expected to slow, with forecast 17% increase next year well below the historical 37%p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 3.1% per year. Factoring in the forecast slowdown in growth, it's pretty clear that Centuria Metropolitan REIT is still expected to 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. They also made no changes to their revenue estimates, implying analysts are not expecting any major impacts to the sales trajectory in the near term. 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 forecasts for Centuria Metropolitan REIT going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Centuria Metropolitan REIT's balance sheet, and whether we think Centuria Metropolitan REIT is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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