Last week, you might have seen that Washington Real Estate Investment Trust (NYSE:WRE) released its annual result to the market. The early response was not positive, with shares down 3.8% to US$22.56 in the past week. It was a pretty bad result overall; while revenues were in line with expectations at US$294m, statutory losses exploded to US$0.20 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, Washington Real Estate Investment Trust's four analysts are forecasting 2021 revenues to be US$291.2m, approximately in line with the last 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$0.12 per share in 2021. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$292.3m and losses of US$0.028 per share in 2021. So it's pretty clear the analysts have mixed opinions on Washington Real Estate Investment Trust even after this update; although they reconfirmed their revenue numbers, it came at the cost of a massive increase in per-share losses.
As a result, there was no major change to the consensus price target of US$24.00, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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. The most optimistic Washington Real Estate Investment Trust analyst has a price target of US$25.00 per share, while the most pessimistic values it at US$22.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Washington Real Estate Investment Trust's past performance and to peers in the same industry. One thing that stands out from these estimates is that revenues are expected to keep falling, roughly in line with the historical decline of 0.8% per annum over the past five years. Compare this with our data on other companies (with analyst coverage) in the industry, which in aggregate are forecast to see their revenue grow 5.6% next year. It seems clear that while the revenue forecasts are all negative, Washington Real Estate Investment Trust's revenue decline is expected to be less severe than that of the industry itself.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Washington Real Estate Investment Trust's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Washington Real Estate Investment Trust. Long-term earnings power is much more important than next year's profits. We have forecasts for Washington Real Estate Investment Trust going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Washington Real Estate Investment Trust (1 is a bit concerning) you should be aware of.
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