Stock Analysis

Need To Know: The Consensus Just Cut Its Growthpoint Properties Limited (JSE:GRT) Estimates For 2021

  •  Updated
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The latest analyst coverage could presage a bad day for Growthpoint Properties Limited (JSE:GRT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the four analysts covering Growthpoint Properties provided consensus estimates of R8.3b revenue in 2021, which would reflect a disturbing 38% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing R11b of revenue in 2021. It looks like forecasts have become a fair bit less optimistic on Growthpoint Properties, given the sizeable cut to revenue estimates.

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JSE:GRT Earnings and Revenue Growth March 24th 2021

There was no particular change to the consensus price target of R15.04, with Growthpoint Properties' latest outlook seemingly not enough to result in a change of valuation. 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. Currently, the most bullish analyst values Growthpoint Properties at R19.00 per share, while the most bearish prices it at R12.45. This shows there is still some 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 38% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 5.5% 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 3.2% annually for the foreseeable future. It's pretty clear that Growthpoint Properties' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Growthpoint Properties after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Growthpoint Properties, including dilutive stock issuance over the past year. Learn more, and discover the 2 other flags we've identified, for free on our platform here.

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Growthpoint Properties

Growthpoint is the largest South African primary JSE-listed REIT with a quality portfolio of 440 directly owned properties in South Africa (RSA) valued at R73.4bn, including four hospitals and one medical chambers valued at R2.6bn owned by Growthpoint Healthcare Property Holdings (RF) Limited (GHPH).

Average dividend payer with questionable track record.