Yahoo Finance M.D.C. Holdings, Inc. (NYSE:MDC) Analysts Just Slashed Next Year's Estimates
The latest analyst coverage could presage a bad day for M.D.C. Holdings, Inc. (NYSE:MDC), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the latest downgrade, the current consensus, from the six analysts covering M.D.C. Holdings, is for revenues of US$3.8b in 2023, which would reflect a stressful 32% reduction in M.D.C. Holdings' sales over the past 12 months. Statutory earnings per share are anticipated to tumble 64% to US$3.20 in the same period. Previously, the analysts had been modelling revenues of US$4.6b and earnings per share (EPS) of US$6.45 in 2023. Indeed, we can see that the analysts are a lot more bearish about M.D.C. Holdings' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for M.D.C. Holdings
The consensus price target fell 18% to US$31.33, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values M.D.C. Holdings at US$39.00 per share, while the most bearish prices it at US$27.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await M.D.C. Holdings shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the M.D.C. Holdings' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 27% by the end of 2023. This indicates a significant reduction from annual growth of 17% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 0.9% per year. So it's pretty clear that M.D.C. Holdings' revenues are expected to shrink faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately they also cut their revenue estimates for next year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of M.D.C. Holdings.
There might be good reason for analyst bearishness towards M.D.C. Holdings, like recent substantial insider selling. Learn more, and discover the 1 other risk we've identified, 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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