Rayonier Inc. Just Beat EPS By 11%: Here's What Analysts Think Will Happen Next
Rayonier Inc. (NYSE:RYN) shares fell 7.1% to US$28.22 in the week since its latest annual results. Revenues disappointed slightly, as sales of US$712m were 2.1% below what analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of US$0.46 coming in 11% above what analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts 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 analysts are expecting for next year.
View our latest analysis for Rayonier
Taking into account the latest results, the most recent consensus for Rayonier from seven analysts is for revenues of US$743.2m in 2020, which is a credible 4.4% increase on its sales over the past 12 months. Statutory earnings per share are expected to shrink 7.7% to US$0.42 in the same period. Before this earnings report, analysts had been forecasting revenues of US$758.2m and earnings per share (EPS) of US$0.48 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
The consensus price target held steady at US$31.22, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Rayonier at US$36.00 per share, while the most bearish prices it at US$20.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Further, we can compare these estimates to past performance, and see how Rayonier forecasts compare to the wider market's forecast performance. It's pretty clear that analysts expect Rayonier's revenue growth will slow down substantially, with revenues next year expected to grow 4.4%, compared to a historical growth rate of 6.8% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.1% next year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Rayonier to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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 Rayonier. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Rayonier analysts - going out to 2021, and you can see them free on our platform here.
You can also see whether Rayonier is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
