Earnings Miss: Independence Realty Trust, Inc. Missed EPS By 17% And Analysts Are Revising Their Forecasts

Independence Realty Trust, Inc. (NYSE:IRT) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues were in line with forecasts, at US$51m, although earnings per share came in 17% below what analysts expected, at US$0.05 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. Readers will be glad to know we’ve aggregated the latest forecasts to see whether analysts have changed their mind on Independence Realty Trust after the latest results.

View our latest analysis for Independence Realty Trust

NYSE:IRT Past and Future Earnings, November 3rd 2019
NYSE:IRT Past and Future Earnings, November 3rd 2019

Taking into account the latest results, the latest consensus from Independence Realty Trust’s nine analysts is for revenues of US$213m in 2020, which would reflect a satisfactory 5.8% improvement in sales compared to the last 12 months. Earnings per share are forecast to dive 51% to US$0.20 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$215m and earnings per share (EPS) of US$0.20 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.

The consensus price target held steady at US$13.22, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Independence Realty Trust at US$16.00 per share, while the most bearish prices it at US$10.00. This shows there is still quite a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how analyst forecasts compare, both to the Independence Realty Trust’s past performance and to peers in the same market. It’s pretty clear that analysts expect Independence Realty Trust’s revenue growth will slow down substantially, with revenues next year expected to grow 5.8%, compared to a historical growth rate of 22% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.1% next year. So it’s pretty clear that, while Independence Realty Trust’s revenue growth is expected to slow, it’s expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that 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 market. The consensus price target held steady at US$13.22, with the latest estimates not enough to have an impact on analysts’ estimated valuations.

With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Independence Realty Trust going out to 2023, and you can see them free on our platform here..

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

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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. Thank you for reading.