American Assets Trust, Inc. Just Beat EPS By 48%: Here's What Analysts Think Will Happen Next

Investors in American Assets Trust, Inc. (NYSE:AAT) had a good week, as its shares rose 7.8% to close at US$26.52 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$111m were what the analysts expected, American Assets Trust surprised by delivering a (statutory) profit of US$0.20 per share, an impressive 48% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for American Assets Trust

Taking into account the latest results, American Assets Trust's four analysts currently expect revenues in 2024 to be US$437.1m, approximately in line with the last 12 months. Statutory earnings per share are forecast to nosedive 22% to US$0.69 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$437.2m and earnings per share (EPS) of US$0.62 in 2024. Although the revenue estimates have not really changed, we can see there's been a decent improvement in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The average the analysts price target fell 7.5% to US$20.67, suggesting thatthe analysts have other concerns, and the improved earnings per share outlook was not enough to allay them. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on American Assets Trust, with the most bullish analyst valuing it at US$23.00 and the most bearish at US$17.00 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.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 1.7% by the end of 2024. This indicates a significant reduction from annual growth of 5.8% 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 3.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - American Assets Trust is expected to lag the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around American Assets Trust's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that American Assets Trust's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple American Assets Trust analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for American Assets Trust (of which 2 don't sit too well with us!) 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.

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