Diversified Royalty Corp. Just Missed Revenue By 6.4%: Here's What Analysts Think Will Happen Next

Investors in Diversified Royalty Corp. (TSE:DIV) had a good week, as its shares rose 3.2% to close at CA$3.60 following the release of its quarterly results. Revenues came in 6.4% below expectations, at CA$18m. Statutory earnings per share were relatively better off, with a per-share profit of CA$0.05 being roughly in line with analyst estimates. Following the result, the 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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After the latest results, the four analysts covering Diversified Royalty are now predicting revenues of CA$82.0m in 2026. If met, this would reflect a meaningful 19% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 32% to CA$0.23. Before this earnings report, the analysts had been forecasting revenues of CA$83.1m and earnings per share (EPS) of CA$0.22 in 2026. So the consensus seems to have become somewhat more optimistic on Diversified Royalty's earnings potential following these results.

See our latest analysis for Diversified Royalty

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 6.0% to CA$4.25. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Diversified Royalty at CA$4.75 per share, while the most bearish prices it at CA$3.50. This is a very narrow spread of estimates, implying either that Diversified Royalty is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2026 brings more of the same, according to the analysts, with revenue forecast to display 15% growth on an annualised basis. That is in line with its 18% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So it's pretty clear that Diversified Royalty is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Diversified Royalty's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Diversified Royalty analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Diversified Royalty (1 is a bit unpleasant!) that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.