James River Group Holdings, Ltd. (NASDAQ:JRVR) Analysts Are Reducing Their Forecasts For This Year
The latest analyst coverage could presage a bad day for James River Group Holdings, Ltd. (NASDAQ:JRVR), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
After the downgrade, the consensus from James River Group Holdings' three analysts is for revenues of US$648m in 2020, which would reflect a not inconsiderable 19% decline in sales compared to the last year of performance. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$0.11 per share this year. Prior to this update, the analysts had been forecasting revenues of US$757m and earnings per share (EPS) of US$2.18 in 2020. Indeed, we can see that the analysts are a lot more bearish about James River Group Holdings' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for James River Group Holdings
Despite the cuts to forecast earnings, there was no real change to the US$41.80 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. There are some variant perceptions on James River Group Holdings, with the most bullish analyst valuing it at US$47.00 and the most bearish at US$37.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the James River Group Holdings' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 19% revenue decline a notable change from historical growth of 14% 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 1.0% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - James River Group Holdings is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of James River Group Holdings.
A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. You can learn more about our debt analysis for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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