Time To Worry? Analysts Are Downgrading Their Star Equity Holdings, Inc. (NASDAQ:STRR) Outlook

Today is shaping up negative for Star Equity Holdings, Inc. (NASDAQ:STRR) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Star Equity Holdings' two analysts is for revenues of US$97m in 2021 which - if met - would reflect a major 24% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 73% to US$0.53. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$124m and losses of US$0.26 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Star Equity Holdings

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Star Equity Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 2.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.1% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Star Equity Holdings is expected to grow much faster than its industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Star Equity Holdings. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Star Equity Holdings, and a few readers might choose to steer clear of the stock.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Star Equity Holdings' business, like major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 2 other flags we've identified.

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 that insiders are buying.

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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. 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.
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