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Assurant, Inc. (NYSE:AIZ) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following the latest upgrade, the four analysts covering Assurant provided consensus estimates of US$9.7b revenue in 2021, which would reflect a measurable 3.3% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$8.7b in 2021. It looks like there's been a clear increase in optimism around Assurant, given the nice increase in revenue forecasts.
There was no particular change to the consensus price target of US$169, with Assurant's latest outlook seemingly not enough to result in a change of valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Assurant, with the most bullish analyst valuing it at US$190 and the most bearish at US$153 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.4% by the end of 2021. This indicates a significant reduction from annual growth of 6.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.8% per year. It's pretty clear that Assurant's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Assurant this year. They also expect company revenue to perform worse than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Assurant.
Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Assurant that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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