Yahoo Finance Simon Property Group, Inc. Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?
Investors in Simon Property Group, Inc. (NYSE:SPG) had a good week, as its shares rose 5.8% to close at US$141 following the release of its annual results. Simon Property Group reported US$5.7b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$6.81 beat expectations, being 2.9% higher than what analysts expected. Analysts 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Simon Property Group after the latest results.
View our latest analysis for Simon Property Group
Taking into account the latest results, the current consensus, from the five analysts covering Simon Property Group, is for revenues of US$5.51b in 2020, which would reflect a noticeable 4.0% reduction in Simon Property Group's sales over the past 12 months. Statutory earnings per share are expected to increase 3.0% to US$7.02. Before this earnings report, analysts had been forecasting revenues of US$5.74b and earnings per share (EPS) of US$6.87 in 2020. So it's pretty clear that while sentiment around revenues has declined following the latest results, analysts are now more bullish on the company's earnings power.
The consensus has made no major changes to the price target of US$164, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Simon Property Group, with the most bullish analyst valuing it at US$218 and the most bearish at US$140 per share. 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 Simon Property Group shareholders.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.0% a significant reduction from annual growth of 2.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 5.1% annually for the foreseeable future. It's pretty clear that Simon Property Group's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Simon Property Group following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Simon Property Group going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Simon Property Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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