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LTC Properties, Inc. (NYSE:LTC) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a pretty mixed result, with revenues beating expectations to hit US$185m. Statutory earnings fell 6.5% short of analyst forecasts, reaching US$2.02 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on LTC Properties after the latest results.
Taking into account the latest results, the dual analysts covering LTC Properties provided consensus estimates of US$177.0m revenue in 2020, which would reflect a measurable 4.4% decline on its sales over the past 12 months. Statutory earnings per share are expected to rise 4.0% to US$2.11. Yet prior to the latest earnings, analysts had been forecasting revenues of US$177.0m and earnings per share (EPS) of US$2.17 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$45.00, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation.
In addition, we can look to LTC Properties's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that sales are expected to reverse, with the forecast 4.4% revenue decline a notable change from historical growth of 7.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 4.9% annually for the foreseeable future. It's pretty clear that LTC Properties's revenues are expected to perform substantially worse 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 LTC Properties. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$45.00, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
It might also be worth considering whether LTC Properties's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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