Fly Leasing Limited (NYSE:FLY) just released its yearly report and things are looking bullish. Results were good overall, with revenues beating analyst predictions by 3.2% to hit US$575m. Statutory earnings per share (EPS) came in at US$7.12, some 8.8% above what analysts had expected. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 dual analysts covering Fly Leasing provided consensus estimates of US$399.8m revenue in 2020, which would reflect a stressful 30% decline on its sales over the past 12 months. Statutory earnings per share are expected to crater 51% to US$3.53 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$434.1m and earnings per share (EPS) of US$3.39 in 2020. If anything, analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
The consensus has made no major changes to the price target of US$26.38, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 30% a significant reduction from annual growth of 2.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 4.7% annually for the foreseeable future. It's pretty clear that Fly Leasing's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Fly Leasing following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. 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 in mind, we wouldn't be too quick to come to a conclusion on Fly Leasing. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Fly Leasing going out as far as 2022, and you can see them free on our platform here.
It might also be worth considering whether Fly Leasing's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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