The second-quarter results for Invitation Homes Inc. (NYSE:INVH) were released last week, making it a good time to revisit its performance. It looks like a credible result overall – although revenues of US$492m were what the analysts expected, Invitation Homes surprised by delivering a (statutory) profit of US$0.11 per share, an impressive 29% above what was forecast. 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Invitation Homes after the latest results.
See our latest analysis for Invitation Homes
NYSE:INVH Earnings and Revenue Growth July 31st 2021
After the latest results, the 13 analysts covering Invitation Homes are now predicting revenues of US$1.95b in 2021. If met, this would reflect an okay 3.2% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to sink 11% to US$0.35 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.94b and earnings per share (EPS) of US$0.35 in 2021. 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$41.06. 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. Currently, the most bullish analyst values Invitation Homes at US$46.00 per share, while the most bearish prices it at US$34.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It’s pretty clear that there is an expectation that Invitation Homes’ revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 6.6% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. Compare this to the 195 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.4% per year. So it’s pretty clear that, while Invitation Homes’ revenue growth is expected to slow, it’s expected to grow roughly in line with the industry.
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. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have forecasts for Invitation Homes going out to 2023, and you can see them free on our platform here.
However, before you get too enthused, we’ve discovered 3 warning signs for Invitation Homes (1 is a bit concerning!) that you should be aware of.
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