Piedmont Office Realty Trust, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
It's been a good week for Piedmont Office Realty Trust, Inc. (NYSE:PDM) shareholders, because the company has just released its latest yearly results, and the shares gained 3.9% to US$24.10. It looks like a credible result overall - although revenues of US$533m were what analysts expected, Piedmont Office Realty Trust surprised by delivering a (statutory) profit of US$1.82 per share, an impressive 186% above what analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Piedmont Office Realty Trust
Following last week's earnings report, Piedmont Office Realty Trust's dual analysts are forecasting 2020 revenues to be US$542.3m, approximately in line with the last 12 months. Statutory earnings per share are expected to dive 69% to US$0.56 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$548.0m and earnings per share (EPS) of US$0.41 in 2020. Although the revenue estimates have not really changed, we can see there's been a great increase in earnings per share expectations, suggesting that analysts have become more bullish after the latest result.
The consensus price target was unchanged at US$24.25, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders.
In addition, we can look to Piedmont Office Realty Trust's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. From these estimates it looks as though analysts expect the years of declining sales to come to an end, given the flat revenue forecast for next year. That would be a definite improvement, given that the past five years have seen sales shrink five years annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.1% per year. So it's pretty clear that, although revenues are improving, Piedmont Office Realty Trust is still expected to grow slower than the market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Piedmont Office Realty Trust following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Piedmont Office Realty Trust. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
You can also view our analysis of Piedmont Office Realty Trust's balance sheet, and whether we think Piedmont Office Realty Trust is carrying too much debt, for free on our platform here.
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