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Safehold Q3 Earnings: Buying Soaring NYSE:SAFE Stock Before Call?

in EARNINGS/INVESTING IDEAS by

Safehold Inc. (NYSE:SAFE) is scheduled to report Q3 earnings results before markets open for trading on October 22, 2020.

The company is expected to report earnings of $0.27/share on revenue of $38.433 million. The consensus earnings per share (EPS) of $0.27/share is based on a poll of 5 analysts and represents a growth in eps of 31.9% over the same quarter last year, when the company reported earnings of $0.21/share.

The revenue forecast of $38.433 million based on a poll of 3 analysts implies a year-over-year (YoY) growth in revenue of 72.3%. Last year the company reported $22.31 million in revenue for the quarter.

Expected to report EPS growth of 31.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $38.43 $22.31 72.3%
EPS $0.27 $0.21 31.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 2 out of the last 8 tracked quarters, and missed expectations 6 quarters.

What are your expectations from Safehold Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.29 $0.24 −17.8% Missed
Q1, 2020 $0.37 $0.36 −3.8% Missed
Q4, 2019 $0.32 $0.25 −21.4% Missed
Q3, 2019 $0.23 $0.21 −9.3% Missed
Q2, 2019 $0.23 $0.18 −20.8% Missed
Q1, 2019 $0.31 $0.36 14.7% Beat
Q4, 2018 $0.12 $0.23 98.7% Beat
Q3, 2018 $0.13 $0.11 −13.6% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −9.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 23, 2020 $53.78 $48.70 −9.4% Decline
July 23, 2020 $52.61 $48.59 −7.64% Decline
July 23, 2020 $51.57 $53 2.77% Increase
July 23, 2020 $34.11 $33.54 −1.67% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of 1.14, the model suggests that the company is likely an earnings manipulator. A value of 1.14 implies a 12.7% chance of earnings manipulation.

Fundamentals And Technical Analysis

Safehold Inc. is currently trading at $65.36/share, down −1.6% for the day. The company is trading at approximately 97.1% of its 52-week high of $67.31/share. The company’s stock price is up 34.2% since the last earnings report and down −0.5% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 58.40 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:SAFE Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 71.98 and a forward P/E multiple of 57.18.

Safehold Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.70. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $65.36
P/E Ratio 72.0x
P/E Ratio (Fwd) 57.2x
PEG Ratio 3.9
Total Debt / Total Capital 30.6%
Levered Free Cash Flow $18.235 million
EV / EBITDA 41.5x

Finbox

Safehold Inc. is a mid-cap stock with a market capitalization of $3.341 billion and a total enterprise value of $4.749 billion. The company operates in the Real Estate sector and the Equity Real Estate Investment Trusts (REITs) industry.

Safehold Inc. (NYSE: SAFE) is revolutionizing real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings. Through its modern ground lease capital solution, Safehold helps owners of high quality multifamily, office, industrial, hospitality and mixed-use properties in major markets throughout the United States generate higher returns with less risk. The Company, which is taxed as a real estate investment trust (REIT) and is managed by its largest shareholder, iStar Inc., seeks to deliver safe, growing income and long-term capital appreciation to its shareholders.

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