Investors in W. P. Carey Inc. (NYSE:WPC) had a good week, as its shares rose 2.8% to close at US$88.27 following the release of its yearly results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$1.2b, statutory earnings beat expectations by a notable 17%, coming in at US$1.78 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top 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 analysts are expecting for next year.
Following the latest results, W. P. Carey's three analysts are now forecasting revenues of US$1.29b in 2020. This would be a modest 7.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 9.0% to US$1.95. In the lead-up to this report, analysts had been modelling revenues of US$1.29b and earnings per share (EPS) of US$1.94 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of US$86.33, 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. The most optimistic W. P. Carey analyst has a price target of US$92.00 per share, while the most pessimistic values it at US$80.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting W. P. Carey's growth to accelerate, with the forecast 7.1% growth ranking favourably alongside historical growth of 4.8% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.9% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect W. P. Carey to grow faster 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. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that W. P. Carey's revenues are expected to grow faster 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 in mind, we wouldn't be too quick to come to a conclusion on W. P. Carey. Long-term earnings power is much more important than next year's profits. We have forecasts for W. P. Carey going out to 2021, and you can see them free on our platform here.
You can also see whether W. P. Carey is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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