Last week, you might have seen that Federal Realty Investment Trust (NYSE:FRT) released its third-quarter result to the market. The early response was not positive, with shares down 2.4% to US$136 in the past week. The result was positive overall – although revenues of US$233m were in line with what analysts predicted, Federal Realty Investment Trust surprised by delivering a profit of US$0.84 per share, modestly greater than expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We’ve gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
Following the latest results, Federal Realty Investment Trust’s seven analysts are now forecasting revenues of US$976m in 2020. This would be a satisfactory 5.1% improvement in sales compared to the last 12 months. Earnings per share are forecast to be US$3.37, approximately in line with the last 12 months. Before this earnings report, analysts had been forecasting revenues of US$975m and earnings per share (EPS) of US$3.45 in 2020. So it looks like there’s been a small decline in overall sentiment after the recent results – there’s been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$142, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Federal Realty Investment Trust analyst has a price target of US$149 per share, while the most pessimistic values it at US$131. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It’s pretty clear that analysts expect Federal Realty Investment Trust’s revenue growth will slow down substantially, with revenues next year expected to grow 5.1%, compared to a historical growth rate of 6.6% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.2% next year. So it’s pretty clear that, while Federal Realty Investment Trust’s revenue growth is expected to slow, it’s expected to grow roughly in line with the industry.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Federal Realty Investment Trust. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Federal Realty Investment Trust going out to 2021, and you can see them free on our platform here..
It might also be worth considering whether Federal Realty Investment Trust’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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