The latest analyst coverage could presage a bad day for Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Shares are up 4.5% to US$8.91 in the past week. We’d be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the latest downgrade, Fortress Transportation and Infrastructure Investors’ seven analysts currently expect revenues in 2020 to be US$579m, approximately in line with the last 12 months. Statutory earnings per share are anticipated to plummet 63% to US$0.65 in the same period. Before this latest update, the analysts had been forecasting revenues of US$649m and earnings per share (EPS) of US$0.96 in 2020. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.
The consensus price target fell 13% to US$19.30, with the weaker earnings outlook clearly leading analyst valuation estimates. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Fortress Transportation and Infrastructure Investors, with the most bullish analyst valuing it at US$27.00 and the most bearish at US$12.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Fortress Transportation and Infrastructure Investors’ past performance and to peers in the same industry. We would highlight that Fortress Transportation and Infrastructure Investors’ revenue growth is expected to slow, with forecast 0.09% increase next year well below the historical 39% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that Fortress Transportation and Infrastructure Investors is also expected to grow slower than other industry participants.
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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we’d understand if readers now felt a bit wary of Fortress Transportation and Infrastructure Investors.
After a downgrade like this, it’s pretty clear that previous forecasts were too optimistic. What’s more, we’ve spotted several possible issues with Fortress Transportation and Infrastructure Investors’ business, like dilutive stock issuance over the past year. Learn more, and discover the 3 other flags we’ve identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
If you spot an error that warrants correction, please contact the editor at email@example.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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