Shareholders in Texas Pacific Land Trust (NYSE:TPL) may be thrilled to learn that the covering analyst has just delivered a major upgrade to their near-term forecasts. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the latest upgrade, the current consensus, from the solitary analyst covering Texas Pacific Land Trust, is for revenues of US$362m in 2020, which would reflect a considerable 8.4% reduction in Texas Pacific Land Trust's sales over the past 12 months. Statutory earnings per share are anticipated to reduce 8.6% to US$27.82 in the same period. Previously, the analyst had been modelling revenues of US$289m and earnings per share (EPS) of US$20.25 in 2020. There has definitely been an improvement in perception recently, with the analyst substantially increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analyst has increased their price target for Texas Pacific Land Trust 9.8% to US$751 on the back of these upgrades.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 8.4%, a significant reduction from annual growth of 46% 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 9.0% annually for the foreseeable future. It's pretty clear that Texas Pacific Land Trust's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that the analyst upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, the analyst also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Texas Pacific Land Trust.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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. Thank you for reading.