ARV - Arvida Retirement Villages

[trader_jackson]

You seem to know these things about ARV

Why is analysts (including Forbar) earnings forecasts (expectations) diminishing as time goes by. Like current consensus F19 earnings is lower than it was a year ago, 6 months ago etc. (same for f20)

Is it that they aren’t totally convinced about ARV performing or something.

In November 2015 FY18 EPS forecast was 6.2c and FY19: N/A

In May 2016 (Don't have November for some reason) FY18 EPS forecast was 7.2c and FY19 8.0c

In November 2017 FY18 EPS forecast was 8.3c and FY19 EPS Forecast was 9.7c

FY18 was actually 8.9c - beating 3 continuously upgraded FY18 estimates by a large margin... in just 2 and a half years underlying EPS forecast by Forsyth (which we all know love and have a bigly bias for ARV since its listing nearly 4 years ago) was smashed by nearly 44%.

A week ago (September 2018) FY19 EPS forecast was 9.3c and was downgraded from 9.7c in late 2017 due to a note in March mentioning "a more conservative view on operating costs and sales margins in FY19 and FY20", price target was subsequently dropped under $1.60 to be 'only' 10% above yesterday's record close price (and we won't bother looking at the dividend yield slapped on top of that)...

If track record is anything to go by (although yes, still small by other players standards ARV are building up quite an impressive one - operationally and financially), I'd reckon they'll be hitting closer to that 'original' 9.7c than the 'already far to bullish' forecast of 9.3c (with target price of over $1.50, the former with target price over $1.60)

One thing is for sure: it'll be way higher than in May 2016 when the target price (yes, waay back then) was nearly today's share price, yet FY19 EPS was only forecast to be 8.0c, not 9.3c (or 9.7c)

To say "analysts earnings forecasts are diminishing as time goes by" is right for FY19 and FY20, but ARV's (actual, not forecast) track record would show they have quite literally been all wrong (far to conservative) in the past which begs the next question, why did I bother doing this post when we know all of the underlying EPS forecasts are just 'random made up numbers' that ARV are almost sure to exceed (as they have done ever since listing)?