Earnings Miss: Gladstone Commercial Corporation Missed EPS By 80% And Analysts Are Revising Their Forecasts

Last week, you might have seen that Gladstone Commercial Corporation (NASDAQ:GOOD) released its third-quarter result to the market. The early response was not positive, with shares down 2.9% to US$10.87 in the past week. It looks like a pretty bad result, all things considered. Although revenues of US$41m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 80% to hit US$0.02 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the most recent consensus for Gladstone Commercial from five analysts is for revenues of US$166.5m in 2026. If met, it would imply a satisfactory 7.2% increase on its revenue over the past 12 months. Per-share earnings are expected to shoot up 34% to US$0.23. Before this earnings report, the analysts had been forecasting revenues of US$166.0m and earnings per share (EPS) of US$0.29 in 2026. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

See our latest analysis for Gladstone Commercial

It might be a surprise to learn that the consensus price target fell 5.3% to US$14.30, with the analysts clearly linking lower forecast earnings to the performance of the stock price. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Gladstone Commercial, with the most bullish analyst valuing it at US$16.00 and the most bearish at US$12.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Gladstone Commercial's past performance and to peers in the same industry. The analysts are definitely expecting Gladstone Commercial's growth to accelerate, with the forecast 5.8% annualised growth to the end of 2026 ranking favourably alongside historical growth of 3.1% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 5.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Gladstone Commercial is expected to grow at about the same rate as the wider industry.

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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Gladstone Commercial's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Gladstone Commercial going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Gladstone Commercial has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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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.