Growth Investors: Industry Analysts Just Upgraded Their Freehold Royalties Ltd. (TSE:FRU) Revenue Forecasts By 11%
Freehold Royalties Ltd. (TSE:FRU) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Freehold Royalties will make substantially more sales than they'd previously expected.
After this upgrade, Freehold Royalties' four analysts are now forecasting revenues of CA$418m in 2022. This would be a huge 63% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 81% to CA$1.26. Prior to this update, the analysts had been forecasting revenues of CA$376m and earnings per share (EPS) of CA$1.24 in 2022. The most recent forecasts are noticeably more optimistic, with a nice gain to revenue estimates and a lift to earnings per share as well.
See our latest analysis for Freehold Royalties
Despite these upgrades, the analysts have not made any major changes to their price target of CA$20.77, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. Currently, the most bullish analyst values Freehold Royalties at CA$27.00 per share, while the most bearish prices it at CA$16.50. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. It's clear from the latest estimates that Freehold Royalties' rate of growth is expected to accelerate meaningfully, with the forecast 91% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 2.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.2% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Freehold Royalties is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Freehold Royalties.
Analysts are definitely bullish on Freehold Royalties, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including concerns around earnings quality. For more information, you can click through to our platform to learn more about this and the 3 other risks we've identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
