Earnings Update: iStar Inc. (NYSE:STAR) Just Reported And Analysts Are Trimming Their Forecasts

It's been a good week for iStar Inc. (NYSE:STAR) shareholders, because the company has just released its latest yearly results, and the shares gained 8.0% to US$17.63. iStar beat revenue forecasts by a solid 13%, hitting US$546m. Statutory losses also increased, with a per-share loss of US$0.87, slightly larger than what the analyst wasexpecting. The analyst 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 collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

View our latest analysis for iStar

Taking into account the latest results, the solitary analyst covering iStar provided consensus estimates of US$189.2m revenue in 2021, which would reflect a concerning 65% decline on its sales over the past 12 months. Losses are forecast to narrow 9.3% to US$0.79 per share. Before this latest report, the consensus had been expecting revenues of US$380.3m and US$0.72 per share in losses. There's been a definite change in sentiment in this update, with the analyst administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target lifted 25% to US$21.00, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the iStar's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 65% revenue decline a notable change from historical growth of 0.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - iStar is expected to lag the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at iStar. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

Even so, be aware that iStar is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

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