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It's been a good week for Easterly Government Properties, Inc. (NYSE:DEA) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.3% to US$21.82. Easterly Government Properties reported in line with analyst predictions, delivering revenues of US$61m and statutory earnings per share of US$0.05, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the four analysts covering Easterly Government Properties are now predicting revenues of US$268.0m in 2021. If met, this would reflect a solid 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 88% to US$0.27. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$268.2m and earnings per share (EPS) of US$0.20 in 2021. Although the revenue estimates have not really changed, we can see there's been a considerable lift to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
There's been no major changes to the consensus price target of US$27.10, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Easterly Government Properties at US$31.50 per share, while the most bearish prices it at US$24.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Easterly Government Properties is an easy business to forecast or the the analysts are all using similar assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Easterly Government Properties' revenue growth is expected to slow, with forecast 11% increase next year well below the historical 25%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.9% next year. So it's pretty clear that, while Easterly Government Properties' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Easterly Government Properties' earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$27.10, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Easterly Government Properties. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Easterly Government Properties going out to 2024, and you can see them free on our platform here..
You still need to take note of risks, for example - Easterly Government Properties has 3 warning signs (and 1 which is significant) we think you should know about.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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