Deliveroo plc (LON:ROO) came out with its interim results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Deliveroo's 17 analysts are now forecasting revenues of UK£2.08b in 2022. This would be an okay 7.6% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 20% to UK£0.15. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£2.05b and losses of UK£0.15 per share in 2022. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although sales forecasts held steady, the consensus also made a modest increase to its losses per share forecasts.
As a result, there was no major change to the consensus price target of UK£1.61, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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. The most optimistic Deliveroo analyst has a price target of UK£2.65 per share, while the most pessimistic values it at UK£0.88. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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 Deliveroo's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2022 being well below the historical 20% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% annually. So it's pretty clear that, while Deliveroo's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Deliveroo. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Deliveroo. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Deliveroo going out to 2024, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 3 warning signs for Deliveroo that you need to be mindful of.
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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.
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