As you might know, M.D.C. Holdings, Inc. (NYSE:MDC) just kicked off its latest second-quarter results with some very strong numbers. M.D.C. Holdings delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$920m, some 14% above indicated. Statutory EPS were US$1.31, an impressive 58% ahead of forecasts. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from M.D.C. Holdings' six analysts is for revenues of US$3.82b in 2020, which would reflect a solid 8.6% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 25% to US$4.72. Before this earnings report, the analysts had been forecasting revenues of US$3.24b and earnings per share (EPS) of US$2.93 in 2020. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 29% to US$46.67per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic M.D.C. Holdings analyst has a price target of US$61.00 per share, while the most pessimistic values it at US$35.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. It's pretty clear that there is an expectation that M.D.C. Holdings' revenue growth will slow down substantially, with revenues next year expected to grow 8.6%, compared to a historical growth rate of 13% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.2% next year. Even after the forecast slowdown in growth, it seems obvious that M.D.C. Holdings is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards M.D.C. Holdings following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple M.D.C. Holdings analysts - going out to 2022, and you can see them free on our platform here.
You still need to take note of risks, for example - M.D.C. Holdings has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.
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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