Shareholders might have noticed that Embassy Office Parks REIT (NSE:EMBASSY) filed its quarterly result this time last week. The early response was not positive, with shares down 4.2% to ₹334 in the past week. Embassy Office Parks REIT reported ₹5.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of ₹3.01 beat expectations, being 9.2% higher than what the analysts expected. 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.
Following the recent earnings report, the consensus from twelve analysts covering Embassy Office Parks REIT is for revenues of ₹22.0b in 2021, implying a small 2.6% decline in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 16% to ₹11.20. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹22.0b and earnings per share (EPS) of ₹11.11 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of ₹395, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Embassy Office Parks REIT at ₹430 per share, while the most bearish prices it at ₹360. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Embassy Office Parks REIT is an easy business to forecast or the the analysts are all using similar assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Embassy Office Parks REIT's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.6%, a significant reduction from annual growth of 264% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.3% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Embassy Office Parks REIT 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Embassy Office Parks REIT's revenues are expected to perform worse than the wider industry. The consensus price target held steady at ₹395, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Embassy Office Parks REIT analysts - going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Embassy Office Parks REIT .
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