Need To Know: Analysts Just Made A Substantial Cut To Their Kennedy-Wilson Holdings, Inc. (NYSE:KW) Estimates
Today is shaping up negative for Kennedy-Wilson Holdings, Inc. (NYSE:KW) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. The stock price has risen 5.5% to US$16.59 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the latest downgrade, the two analysts covering Kennedy-Wilson Holdings provided consensus estimates of US$584m revenue in 2023, which would reflect a perceptible 2.6% decline on its sales over the past 12 months. Statutory earnings per share are expected to be US$0.47, roughly flat on the last 12 months. Before this latest update, the analysts had been forecasting revenues of US$814m and earnings per share (EPS) of US$2.84 in 2023. Indeed, we can see that the analysts are a lot more bearish about Kennedy-Wilson Holdings' prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Kennedy-Wilson Holdings
Despite the cuts to forecast earnings, there was no real change to the US$19.00 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. Currently, the most bullish analyst values Kennedy-Wilson Holdings at US$20.00 per share, while the most bearish prices it at US$18.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
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. We would also point out that the forecast 2.6% annualised revenue decline to the end of 2023 is better than the historical trend, which saw revenues shrink 7.8% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 7.1% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Kennedy-Wilson Holdings to suffer worse than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Kennedy-Wilson Holdings. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Kennedy-Wilson Holdings after the downgrade.
There might be good reason for analyst bearishness towards Kennedy-Wilson Holdings, like its declining profit margins. For more information, you can click here to discover this and the 2 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.
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