EPR Properties (NYSE:EPR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
Following the upgrade, the most recent consensus for EPR Properties from its three analysts is for revenues of US$511m in 2021 which, if met, would be a substantial 32% increase on its sales over the past 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$0.66 in per-share earnings. Prior to this update, the analysts had been forecasting revenues of US$459m and earnings per share (EPS) of US$0.51 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$53.38, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic EPR Properties analyst has a price target of US$62.00 per share, while the most pessimistic values it at US$43.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that EPR Properties' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 73% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 0.7% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 6.5% annually. So it looks like EPR Properties is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So EPR Properties could be a good candidate for more research.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple EPR Properties analysts - going out to 2022, and you can see them 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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What are the risks and opportunities for EPR Properties?
Trading at 56.5% below our estimate of its fair value
Earnings are forecast to grow 5.77% per year
Earnings grew by 1452.9% over the past year
Interest payments are not well covered by earnings
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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