Market forces rained on the parade of eXp World Holdings, Inc. (NASDAQ:EXPI) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the downgrade, the most recent consensus for eXp World Holdings from its three analysts is for revenues of US$1.2b in 2020 which, if met, would be a decent 13% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$0.07 per share this year. Before this latest update, the analysts had been forecasting revenues of US$1.4b and earnings per share (EPS) of US$0.10 in 2020. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It’s pretty clear that there is an expectation that eXp World Holdings’ revenue growth will slow down substantially, with revenues next year expected to grow 13%, compared to a historical growth rate of 68% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.7% next year. So it’s pretty clear that, while eXp World Holdings’ revenue growth is expected to slow, it’s still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the serious cut to this year’s outlook, it’s clear that analysts have turned more bearish on eXp World Holdings, and we wouldn’t blame shareholders for feeling a little more cautious themselves.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple eXp World Holdings analysts – going out to 2022, and you can see them free on our platform here.
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