Freehold Royalties Ltd. (TSE:FRU) just released its latest first-quarter report and things are not looking great. Unfortunately, Freehold Royalties delivered a serious earnings miss. Revenues of CA$74m were 12% below expectations, and statutory earnings per share of CA$0.23 missed estimates by 39%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Freehold Royalties

Following the latest results, Freehold Royalties' five analysts are now forecasting revenues of CA$323.3m in 2024. This would be a satisfactory 3.5% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 27% to CA$1.14. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$325.9m and earnings per share (EPS) of CA$0.90 in 2024. Although the revenue estimates have not really changed, we can see there's been a very substantial lift in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of CA$18.15, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. The most optimistic Freehold Royalties analyst has a price target of CA$21.00 per share, while the most pessimistic values it at CA$15.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 Freehold Royalties' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.8% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.6% annually. So it's pretty clear that, while Freehold Royalties' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Freehold Royalties' earnings potential next year. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at CA$18.15, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Freehold Royalties analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that Freehold Royalties is showing 1 warning sign in our investment analysis , you should know about...

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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.