Shareholders will be ecstatic, with their stake up 31% over the past week following Tanger Factory Outlet Centers, Inc.'s (NYSE:SKT) latest third-quarter results. It was a solid earnings report, with revenues and earnings both coming in very strong. Revenues were 19% higher than the analysts had forecast, at US$103m, while the company also delivered a surprise statutory profit, against analyst expectations of a loss. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the four analysts covering Tanger Factory Outlet Centers provided consensus estimates of US$371.7m revenue in 2021, which would reflect a noticeable 7.8% decline on its sales over the past 12 months. Earnings are expected to improve, with Tanger Factory Outlet Centers forecast to report a statutory profit of US$0.058 per share. In the lead-up to this report, the analysts had been modelling revenues of US$371.7m and earnings per share (EPS) of US$0.088 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 7.8% to US$5.96, suggesting the revised estimates are not indicative of a weaker long-term future for the business. 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. The most optimistic Tanger Factory Outlet Centers analyst has a price target of US$7.50 per share, while the most pessimistic values it at US$4.00. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 0.06% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 7.8% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.1% per year. So while a broad number of companies are forecast to decline, unfortunately Tanger Factory Outlet Centers is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tanger Factory Outlet Centers. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Tanger Factory Outlet Centers' revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 Tanger Factory Outlet Centers going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Tanger Factory Outlet Centers (1 makes us a bit uncomfortable!) that you need to take into consideration.
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