One thing we could say about the analysts on Colony Credit Real Estate, Inc. (NYSE:CLNC) – they aren’t optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the downgrade, the current consensus from Colony Credit Real Estate’s two analysts is for revenues of US$323m in 2021 which – if met – would reflect a sizeable 40% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 85% to US$0.43. Before this latest update, the analysts had been forecasting revenues of US$362m and earnings per share (EPS) of US$0.21 in 2021. There looks to have been a major change in sentiment regarding Colony Credit Real Estate’s prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.
View our latest analysis for Colony Credit Real Estate
NYSE:CLNC Earnings and Revenue Growth May 22nd 2021
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. One thing stands out from these estimates, which is that Colony Credit Real Estate is forecast to grow faster in the future than it has in the past, with revenues expected to display 56% annualised growth until the end of 2021. If achieved, this would be a much better result than the 1.1% annual decline over the past three years. What’s also interesting is that our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue decline 14% annually for the foreseeable future. So it’s pretty clear that Colony Credit Real Estate is expected to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Colony Credit Real Estate dropped from profits to a loss this year. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Given the serious cut to this year’s outlook, it’s clear that analysts have turned more bearish on Colony Credit Real Estate, and we wouldn’t blame shareholders for feeling a little more cautious themselves.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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