Yahoo Finance Home Point Capital Inc. (NASDAQ:HMPT) Analysts Are Reducing Their Forecasts For This Year
The analysts covering Home Point Capital Inc. (NASDAQ:HMPT) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
After the downgrade, the consensus from Home Point Capital's eight analysts is for revenues of US$464m in 2022, which would reflect a concerning 46% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to plunge 43% to US$0.12 in the same period. Before this latest update, the analysts had been forecasting revenues of US$540m and earnings per share (EPS) of US$0.38 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.
See our latest analysis for Home Point Capital
Analysts made no major changes to their price target of US$3.94, suggesting the downgrades are not expected to have a long-term impact on Home Point Capital's valuation. 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 Home Point Capital, with the most bullish analyst valuing it at US$5.50 and the most bearish at US$3.00 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.
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. We would also point out that the forecast 57% annualised revenue decline to the end of 2022 is roughly in line with the historical trend, which saw revenues shrink 52% annually over the past year Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 4.0% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Home Point Capital to suffer worse than the wider industry.
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. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Home Point Capital.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Home Point Capital going out to 2024, and you can see them free on our platform here.
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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.
