Things Look Grim For Tri Pointe Homes, Inc. (NYSE:TPH) After Today's Downgrade

Market forces rained on the parade of Tri Pointe Homes, Inc. (NYSE:TPH) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the six analysts covering Tri Pointe Homes provided consensus estimates of US$3.8b revenue in 2025, which would reflect a definite 15% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to plunge 35% to US$3.24 in the same period. Previously, the analysts had been modelling revenues of US$4.4b and earnings per share (EPS) of US$4.50 in 2025. Indeed, we can see that the analysts are a lot more bearish about Tri Pointe Homes' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Tri Pointe Homes

It'll come as no surprise then, to learn that the analysts have cut their price target 15% to US$40.00.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 15% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 6.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Tri Pointe Homes is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. 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 Tri Pointe Homes.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Tri Pointe Homes, including recent substantial insider selling. Learn more, and discover the 1 other flag we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.