It's been a good week for National Health Investors, Inc. (NYSE:NHI) shareholders, because the company has just released its latest annual results, and the shares gained 2.4% to US$90.79. Results were roughly in line with estimates, with revenues of US$318m and statutory earnings per share of US$3.67. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Following the latest results, National Health Investors's three analysts are now forecasting revenues of US$344.7m in 2020. This would be a decent 8.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 5.3% to US$3.89. In the lead-up to this report, analysts had been modelling revenues of US$333.5m and earnings per share (EPS) of US$3.89 in 2020. So it looks like there's been no major change in sentiment following the latest results, although analysts have made a slight bump in to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of US$84.89, suggesting analysts are focused on earnings as the driver of value creation. 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. Currently, the most bullish analyst values National Health Investors at US$96.00 per share, while the most bearish prices it at US$65.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
It can also be useful to step back and take a broader view of how analyst forecasts compare to National Health Investors's performance in recent years. Next year brings more of the same, according to analysts, with revenue forecast to grow 8.4%, in line with its 10% annual 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 4.9% per year. So it's pretty clear that National Health Investors is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. The consensus price target held steady at US$84.89, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on National Health Investors. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for National Health Investors going out to 2024, and you can see them free on our platform here..
It might also be worth considering whether National Health Investors's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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