The Consensus EPS Estimates For Finance Of America Companies Inc. (NYSE:FOA) Just Fell A Lot

Market forces rained on the parade of Finance Of America Companies Inc. (NYSE:FOA) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the four analysts covering Finance Of America Companies provided consensus estimates of US$1.1b revenue in 2022, which would reflect a considerable 8.9% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 98% to US$0.17. Prior to this update, the analysts had been forecasting revenues of US$1.3b and earnings per share (EPS) of US$0.41 in 2022. So we can see that the consensus has become notably more bearish on Finance Of America Companies' outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Finance Of America Companies

The consensus price target fell 10% to US$3.44, implicitly signalling that lower earnings per share are a leading indicator for Finance Of America Companies' valuation. 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 Finance Of America Companies analyst has a price target of US$5.00 per share, while the most pessimistic values it at US$1.75. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2022 compared to the historical decline of 39% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.8% per year. So while a broad number of companies are forecast to grow, unfortunately Finance Of America Companies is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Finance Of America Companies dropped from profits to a loss this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Finance Of America Companies.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Finance Of America Companies analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.