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Retail Opportunity Investments Corp. Just Recorded A 64% EPS Beat: Here's What Analysts Are Forecasting Next

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Simply Wall St
·4 min read
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Last week, you might have seen that Retail Opportunity Investments Corp. (NASDAQ:ROIC) released its quarterly result to the market. The early response was not positive, with shares down 8.5% to US$10.10 in the past week. Revenues were US$70m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.06, an impressive 64% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Retail Opportunity Investments

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Taking into account the latest results, Retail Opportunity Investments' three analysts currently expect revenues in 2021 to be US$282.3m, approximately in line with the last 12 months. Statutory earnings per share are forecast to shrink 5.4% to US$0.27 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$279.4m and earnings per share (EPS) of US$0.25 in 2021. So the consensus seems to have become somewhat more optimistic on Retail Opportunity Investments' earnings potential following these results.

The consensus price target was unchanged at US$11.90, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Retail Opportunity Investments at US$15.00 per share, while the most bearish prices it at US$9.00. 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.

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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.9%, a significant reduction from annual growth of 8.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Retail Opportunity Investments is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Retail Opportunity Investments following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. 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 Retail Opportunity Investments. Long-term earnings power is much more important than next year's profits. We have forecasts for Retail Opportunity Investments going out to 2021, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Retail Opportunity Investments that you need to be mindful of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.