Kimco Realty Corporation (NYSE:KIM) defied analyst predictions to release its full-year results, which were ahead of market expectations. Results were good overall, with revenues beating analyst predictions by 2.2% to hit US$1.2b. Statutory earnings per share (EPS) came in at US$0.80, some 5.9% above what analysts had expected. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. With this in mind, we’ve gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, Kimco Realty’s 15 analysts currently expect revenues in 2020 to be US$1.15b, approximately in line with the last 12 months. Statutory earnings per share are expected to shrink 7.7% to US$0.74 in the same period. Before this earnings report, analysts had been forecasting revenues of US$1.15b and earnings per share (EPS) of US$0.75 in 2020. 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.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$20.36. 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. Currently, the most bullish analyst values Kimco Realty at US$24.00 per share, while the most bearish prices it at US$18.00. 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.
In addition, we can look to Kimco Realty’s past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that sales are expected to reverse, with the forecast 0.6% revenue decline a notable change from historical growth of 1.5% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.9% next year. It’s pretty clear that Kimco Realty’s revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there’s been no major change in the business’ prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse 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 Kimco Realty. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple Kimco Realty analysts – going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Kimco Realty’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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