Renta Corporación Real Estate, S.A. (BME:REN) Just Reported Earnings, And Analysts Cut Their Target Price

It's been a good week for Renta Corporación Real Estate, S.A. (BME:REN) shareholders, because the company has just released its latest half-year results, and the shares gained 4.3% to €1.20. Results overall were respectable, with statutory earnings of €0.21 per share roughly in line with what the analysts had forecast. Revenues of €41m came in 3.8% ahead of analyst predictions. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out the opportunities and risks within the ES Real Estate industry.

Following last week's earnings report, Renta Corporación Real Estate's two analysts are forecasting 2022 revenues to be €80.5m, approximately in line with the last 12 months. Per-share earnings are expected to surge 54% to €0.36. Yet prior to the latest earnings, the analysts had been anticipated revenues of €89.5m and earnings per share (EPS) of €0.35 in 2022. So there's been a clear change in sentiment after these results, with the analysts making a real cut to revenues and reconfirming their earnings per share estimates.

It will come as no surprise then, that the consensus price target fell 7.5% to €2.78following these changes.

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. We would highlight that sales are expected to reverse, with a forecast 2.9% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 4.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Renta Corporación Real Estate is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Still, earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Renta Corporación Real Estate's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Renta Corporación Real Estate. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Renta Corporación Real Estate going out as far as 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for Renta Corporación Real Estate you should be aware of, and 1 of them can't be ignored.

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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.