It's been a good week for The Macerich Company (NYSE:MAC) shareholders, because the company has just released its latest yearly results, and the shares gained 3.7% to US$16.14. Results were mixed, with revenues of US$863m exceeding expectations, even as statutory earnings per share (EPS) fell badly short. Earnings were US$0.07 per share, -25% short of analyst expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, Macerich's eight analysts currently expect revenues in 2022 to be US$869.5m, approximately in line with the last 12 months. Statutory earnings per share are predicted to bounce 80% to US$0.12. Before this earnings announcement, the analysts had been modelling revenues of US$812.8m and losses of US$0.069 per share in 2022. So we can see there's been a pretty clear upgrade to expectations following the latest results, with a slight bump in revenues expected to lead to profitability earlier than previously forecast.
Despite these upgrades, the consensus price target fell 5.2% to US$20.48, perhaps signalling that the uplift in performance is not expected to last. 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. Currently, the most bullish analyst values Macerich at US$30.00 per share, while the most bearish prices it at US$14.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast out to 2022. That would be a definite improvement, given that the past five years have seen sales shrink 7.0% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.9% per year. Although Macerich's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting Macerich to become profitable next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Macerich. Long-term earnings power is much more important than next year's profits. We have forecasts for Macerich going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 5 warning signs for Macerich (1 makes us a bit uncomfortable!) that you need to be mindful of.
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