It's been a good week for Safehold Inc. (NYSE:SAFE) shareholders, because the company has just released its latest third-quarter results, and the shares gained 8.3% to US$71.00. The result was positive overall - although revenues of US$38m were in line with what the analysts predicted, Safehold surprised by delivering a statutory profit of US$0.28 per share, modestly greater than expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the six analysts covering Safehold are now predicting revenues of US$178.8m in 2021. If met, this would reflect a major 21% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 15% to US$1.31. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$178.3m and earnings per share (EPS) of US$1.32 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 9.1% to US$68.00despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Safehold's earnings by assigning a price premium. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Safehold analyst has a price target of US$76.00 per share, while the most pessimistic values it at US$56.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Safehold's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Safehold's revenue growth will slow down substantially, with revenues next year expected to grow 21%, compared to a historical growth rate of 47% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.9% next year. Even after the forecast slowdown in growth, it seems obvious that Safehold is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Safehold. 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 Safehold going out to 2024, 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 3 warning signs for Safehold (1 can't be ignored!) 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.
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