Realty Income Corporation (NYSE:O) just released its latest yearly results and things are looking bullish. The company beat expectations with revenues of US$1.5b arriving 5.6% ahead of forecasts. Statutory earnings per share (EPS) were US$1.38, 3.4% 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
After the latest results, the six analysts covering Realty Income are now predicting revenues of US$1.60b in 2020. If met, this would reflect a credible 7.6% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 7.6% to US$1.49. Before this earnings report, analysts had been forecasting revenues of US$1.59b and earnings per share (EPS) of US$1.49 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Analysts reconfirmed their price target of US$81.56, showing that the business is executing well and in line with expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Realty Income analyst has a price target of US$102 per share, while the most pessimistic values it at US$65.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Realty Income shareholders.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Realty Income's performance in recent years. We can infer from the latest estimates that analysts are expecting a continuation of Realty Income's historical trends, as next year's forecast 7.6% revenue growth is roughly in line with 9.0% 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 4.9% per year. So although Realty Income is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider 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. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$81.56, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Realty Income analysts - going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Realty Income's balance sheet, and whether we think Realty Income is carrying too much debt, for free on our platform here.
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