Revenue Beat: New Residential Investment Corp. Exceeded Revenue Forecasts By 11% And Analysts Are Updating Their Estimates

New Residential Investment Corp. (NYSE:NRZ) just released its latest full-year results and things are looking bullish. New Residential Investment beat revenue and statutory earnings per share (EPS) expectations, with sales hitting US$1.6b (11% ahead of estimates) and EPS reaching US$1.34 (a 5.2% beat). This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for New Residential Investment

NYSE:NRZ Past and Future Earnings, February 10th 2020
NYSE:NRZ Past and Future Earnings, February 10th 2020

After the latest results, the nine analysts covering New Residential Investment are now predicting revenues of US$2.03b in 2020. If met, this would reflect a sizeable 26% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shoot up 46% to US$1.97. In the lead-up to this report, analysts had been modelling revenues of US$2.03b and earnings per share (EPS) of US$1.92 in 2020. So the consensus seems to have become somewhat more optimistic on New Residential Investment’s earnings potential following these results.

There’s been no major changes to the consensus price target of US$18.08, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s valuation. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic New Residential Investment analyst has a price target of US$19.50 per share, while the most pessimistic values it at US$16.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the New Residential Investment’s past performance and to peers in the same market. Next year brings more of the same, according to analysts, with revenue forecast to grow 26%, in line with its 26% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 22% next year. It’s clear that while New Residential Investment’s revenue growth is expected to continue on its current trajectory, it’s only expected to grow in line with the market itself.

The Bottom Line

The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards New Residential Investment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. The consensus price target held steady at US$18.08, with the latest estimates not enough to have an impact on analysts’ estimated valuations.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for New Residential Investment going out to 2021, and you can see them free on our platform here..

It might also be worth considering whether New Residential Investment’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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