Celebrations may be in order for M.D.C. Holdings, Inc. (NYSE:MDC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 9.0% over the past week, closing at US$51.28. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
Following the upgrade, the consensus from six analysts covering M.D.C. Holdings is for revenues of US$4.5b in 2023, implying a considerable 12% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to reduce 6.2% to US$4.99 in the same period. Prior to this update, the analysts had been forecasting revenues of US$4.0b and earnings per share (EPS) of US$3.54 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
View our latest analysis for M.D.C. Holdings
With these upgrades, we're not surprised to see that the analysts have lifted their price target 18% to US$48.88 per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on M.D.C. Holdings, with the most bullish analyst valuing it at US$56.00 and the most bearish at US$33.50 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await M.D.C. Holdings shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 22% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 16% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.3% per year. It's pretty clear that M.D.C. Holdings' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, M.D.C. Holdings could be worth investigating further.