The quarterly results for American Finance Trust, Inc. (NASDAQ:AFIN) were released last week, making it a good time to revisit its performance. The results were positive, with revenue coming in at US$75m, beating analyst expectations by 4.3%. 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.
Taking into account the latest results, American Finance Trust’s single analyst currently expect revenues in 2020 to be US$303.2m, approximately in line with the last 12 months. Prior to the latest earnings, the analyst was forecasting revenues of US$296.7m in 2020, and did not provide an earnings per share estimate. It looks like there’s been a clear increase in sentiment after the latest results, given the slight bump in revenue estimates.
Intriguingly,the analyst has cut their price target 18% to US$10.17 showing a clear decline in sentiment around American Finance Trust’s valuation.
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. It’s pretty clear that there is an expectation that American Finance Trust’s revenue growth will slow down substantially, with revenues next year expected to grow 0.1%, compared to a historical growth rate of 15% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.8% per year. So it’s pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than American Finance Trust.
The Bottom Line
The most important thing to take away is that the analyst upgraded their revenue estimates for next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
One American Finance Trust broker/analyst has provided estimates out to 2022, which can be seen for free on our platform here.
You still need to take note of risks, for example – American Finance Trust has 5 warning signs (and 1 which shouldn’t be ignored) we think you should know about.
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