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Here's What Analysts Are Forecasting For Apple Hospitality REIT, Inc. After Its Full-Year Results

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Simply Wall St
·4 min read
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It's been a mediocre week for Apple Hospitality REIT, Inc. (NYSE:APLE) shareholders, with the stock dropping 11% to US$13.40 in the week since its latest annual results. Revenues of US$1.3b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.77, missing estimates by 2.5%. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.

Check out our latest analysis for Apple Hospitality REIT

NYSE:APLE Past and Future Earnings, February 27th 2020
NYSE:APLE Past and Future Earnings, February 27th 2020

Taking into account the latest results, Apple Hospitality REIT's four analysts currently expect revenues in 2020 to be US$1.27b, approximately in line with the last 12 months. Statutory earnings per share are expected to reduce 2.3% to US$0.75 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.26b and earnings per share (EPS) of US$0.96 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.

The consensus price target held steady at US$17.00, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Apple Hospitality REIT, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$15.50 per share. 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.

Further, we can compare these estimates to past performance, and see how Apple Hospitality REIT forecasts compare to the wider market's forecast performance. We would highlight that Apple Hospitality REIT's revenue growth is expected to slow, with forecast 0.4% increase next year well below the historical 9.8%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Apple Hospitality REIT to grow slower than the wider market.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Apple Hospitality REIT. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. 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.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Apple Hospitality REIT analysts - going out to 2021, and you can see them free on our platform here.

It might also be worth considering whether Apple Hospitality REIT's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.