Omega Healthcare Investors, Inc. (NYSE:OHI) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. Omega Healthcare Investors missed analyst forecasts, with revenues of US$754m and statutory earnings per share (EPS) of US$1.80, falling short by 5.9% and 6.9% respectively. The 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the seven analysts covering Omega Healthcare Investors are now predicting revenues of US$811.1m in 2023. If met, this would reflect a satisfactory 7.5% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 33% to US$1.21 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$815.0m and earnings per share (EPS) of US$1.23 in 2023. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$29.42. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on Omega Healthcare Investors, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$24.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Omega Healthcare Investors’ growth to accelerate, with the forecast 7.5% annualised growth to the end of 2023 ranking favourably alongside historical growth of 1.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.1% annually. Omega Healthcare Investors is expected to grow at about the same rate as its industry, so it’s not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for Omega Healthcare Investors going out to 2025, and you can see them free on our platform here.
It is also worth noting that we have found 4 warning signs for Omega Healthcare Investors (3 make us uncomfortable!) that you need to take into consideration.
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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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