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Invitation Homes Inc. (NYSE:INVH) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like a credible result overall - although revenues of US$492m were what the analysts expected, Invitation Homes surprised by delivering a (statutory) profit of US$0.11 per share, an impressive 29% above what was forecast. Following the result, the 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the 13 analysts covering Invitation Homes are now predicting revenues of US$1.95b in 2021. If met, this would reflect an okay 3.2% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to drop 11% to US$0.35 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.94b and earnings per share (EPS) of US$0.35 in 2021. 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.
The analysts reconfirmed their price target of US$41.06, showing that the business is executing well and in line with expectations. 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. There are some variant perceptions on Invitation Homes, with the most bullish analyst valuing it at US$46.00 and the most bearish at US$34.00 per share. This is a very narrow spread of estimates, implying either that Invitation Homes is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Invitation Homes' revenue growth is expected to slow, with the forecast 6.6% annualised growth rate until the end of 2021 being well below the historical 16% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.4% annually. Factoring in the forecast slowdown in growth, it looks like Invitation Homes is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$41.06, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Invitation Homes. 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 Invitation Homes going out to 2023, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 3 warning signs for Invitation Homes (of which 1 can't be ignored!) 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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