Last week saw the newest yearly earnings release from Retail Opportunity Investments Corp. (NASDAQ:ROIC), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of US$295m were in line with what analysts predicted, Retail Opportunity Investments surprised by delivering a statutory profit of US$0.42 per share, modestly greater than expected. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
After the latest results, the five analysts covering Retail Opportunity Investments are now predicting revenues of US$304.3m in 2020. If met, this would reflect a satisfactory 3.2% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to decline 20% to US$0.34 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$304.3m and earnings per share (EPS) of US$0.34 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.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$19.23. 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 Retail Opportunity Investments, with the most bullish analyst valuing it at US$21.00 and the most bearish at US$17.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Retail Opportunity Investments's revenue growth is expected to slow, with forecast 3.2% increase next year well below the historical 13%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.0% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Retail Opportunity Investments to grow slower 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. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Retail Opportunity Investments going out to 2021, and you can see them free on our platform here..
You can also view our analysis of Retail Opportunity Investments's balance sheet, and whether we think Retail Opportunity Investments is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.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.