CaixaBank, S.A. (BME:CABK) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters. Results showed a clear earnings miss, with €2.0b revenue coming in 3.7% lower than what the analystsexpected. Statutory earnings per share (EPS) of €0.015 missed the mark badly, arriving some 77% below what was expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the 16 analysts covering CaixaBank are now predicting revenues of €7.95b in 2020. If met, this would reflect a satisfactory 4.6% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to crater 48% to €0.098 in the same period. Before this earnings report, the analysts had been forecasting revenues of €8.13b and earnings per share (EPS) of €0.18 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
The consensus price target fell 7.4% to €2.24, with the weaker earnings outlook clearly leading valuation estimates. 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 CaixaBank, with the most bullish analyst valuing it at €3.45 and the most bearish at €1.40 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that CaixaBank's revenue growth will slow down substantially, with revenues next year expected to grow 4.6%, compared to a historical growth rate of 10% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.1% next year. Even after the forecast slowdown in growth, it seems obvious that CaixaBank is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CaixaBank. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple CaixaBank analysts - going out to 2023, and you can see them free on our platform here.
Even so, be aware that CaixaBank is showing 4 warning signs in our investment analysis , you should know about...
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