A week ago, M.D.C. Holdings, Inc. (NYSE:MDC) came out with a strong set of annual numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of US$3.3b arriving 2.2% ahead of forecasts. Statutory earnings per share (EPS) were US$3.72, 4.7% ahead of estimates. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for M.D.C. Holdings from six analysts is for revenues of US$3.77b in 2020, which is a notable 15% increase on its sales over the past 12 months. Statutory earnings per share are expected to grow 14% to US$4.37. Before this earnings report, analysts had been forecasting revenues of US$3.58b and earnings per share (EPS) of US$4.11 in 2020. It looks like there's been a modest increase in sentiment following the latest results, with analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
With these upgrades, we're not surprised to see that analysts have lifted their price target 5.0% to US$45.25 per share. 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 M.D.C. Holdings, with the most bullish analyst valuing it at US$52.00 and the most bearish at US$39.50 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that analysts are expecting a continuation of M.D.C. Holdings's historical trends, as next year's forecast 15% revenue growth is roughly in line with 13% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.3% per year. So although M.D.C. Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around M.D.C. Holdings's earnings potential next year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for M.D.C. Holdings going out to 2021, and you can see them free on our platform here..
You can also view our analysis of M.D.C. Holdings's balance sheet, and whether we think M.D.C. Holdings is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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