A week ago, Sun Communities, Inc. (NYSE:SUI) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. Statutory earnings performance was extremely strong, with revenue of US$401m beating expectations by 20% and earnings per share (EPS) of US$0.83, an impressive 54%ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 five analysts covering Sun Communities are now predicting revenues of US$1.43b in 2021. If met, this would reflect a decent 10% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 4.7% to US$1.53 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.43b and earnings per share (EPS) of US$1.53 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$160, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Sun Communities at US$170 per share, while the most bearish prices it at US$139. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Sun Communities is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Sun Communities' revenue growth is expected to slow, with forecast 10% increase next year well below the historical 14%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) 6.0% next year. So it's pretty clear that, while Sun Communities' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$160, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Sun Communities 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 Sun Communities (of which 1 is a bit unpleasant!) 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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