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One thing we could say about the analysts on KKR Real Estate Finance Trust Inc. (NYSE:KREF) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After the downgrade, the five analysts covering KKR Real Estate Finance Trust are now predicting revenues of US$127m in 2020. If met, this would reflect a huge 95% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to step up 18% to US$0.63. Prior to this update, the analysts had been forecasting revenues of US$127m and earnings per share (EPS) of US$0.61 in 2020. The forecasts seem to have become more bullish on the business, judging by these new earnings per share estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting KKR Real Estate Finance Trust's growth to accelerate, with the forecast 95% growth ranking favourably alongside historical growth of 17% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 52% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that KKR Real Estate Finance Trust 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. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that KKR Real Estate Finance Trust's revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of KKR Real Estate Finance Trust going forwards.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with KKR Real Estate Finance Trust's financials, such as the risk of cutting its dividend. Learn more, and discover the 1 other warning sign we've identified, for free 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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