Last week, you might have seen that CubeSmart (NYSE:CUBE) released its annual result to the market. The early response was not positive, with shares down 2.2% to US$32.26 in the past week. The result was positive overall – although revenues of US$644m were in line with what analysts predicted, CubeSmart surprised by delivering a statutory profit of US$0.88 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 top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the latest consensus from CubeSmart’s eight analysts is for revenues of US$679.0m in 2020, which would reflect a satisfactory 5.4% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to decrease 9.4% to US$0.80 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$677.8m and earnings per share (EPS) of US$0.78 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
There’s been no major changes to the consensus price target of US$31.73, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s valuation. 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 CubeSmart analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$28.00. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or that analysts have a clear view on its prospects.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the CubeSmart’s past performance and to peers in the same market. We would highlight that CubeSmart’s revenue growth is expected to slow, with forecast 5.4% increase next year well below the historical 10%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.9% next year. So it’s pretty clear that, while CubeSmart’s revenue growth is expected to slow, it’s expected to grow roughly in line with the industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around CubeSmart’s earnings potential next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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 CubeSmart. 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 CubeSmart going out to 2024, and you can see them free on our platform here..
You can also view our analysis of CubeSmart’s balance sheet, and whether we think CubeSmart is carrying too much debt, for free on our platform here.
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