Earnings Miss: Prime US REIT Missed EPS And Analysts Are Revising Their Forecasts

Shareholders might have noticed that Prime US REIT (SGX:OXMU) filed its annual result this time last week. The early response was not positive, with shares down 9.3% to US$0.48 in the past week. Revenues came in at US$163m, in line with estimates, while Prime US REIT reported a statutory loss of US$0.023 per share, well short of prior analyst forecasts for a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Prime US REIT

Taking into account the latest results, Prime US REIT's four analysts currently expect revenues in 2023 to be US$164.6m, approximately in line with the last 12 months. Earnings are expected to improve, with Prime US REIT forecast to report a statutory profit of US$0.046 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$168.6m and earnings per share (EPS) of US$0.061 in 2023. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the US$0.80 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Prime US REIT analyst has a price target of US$1.05 per share, while the most pessimistic values it at US$0.65. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Prime US REIT shareholders.

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. We would highlight that Prime US REIT's revenue growth is expected to slow, with the forecast 1.0% annualised growth rate until the end of 2023 being well below the historical 8.9% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.4% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Prime US REIT.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$0.80, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Prime US REIT. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Prime US REIT analysts - going out to 2025, and you can see them free on our platform here.

Even so, be aware that Prime US REIT is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...

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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.