Yahoo Finance Dixons Carphone plc Just Released Its Half-Yearly Results And Analysts Are Updating Their Estimates
It's been a pretty great week for Dixons Carphone plc (LON:DC.) shareholders, with its shares surging 13% to UK£1.45 in the week since its latest interim results. Revenues of UK£4.7b came in 3.0% below estimates, but losses were well contained with a per-share loss of UK£0.28 being some 11% smaller than what analysts were predicting. 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 thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.
Check out our latest analysis for Dixons Carphone
Taking into account the latest results, Dixons Carphone's eleven analysts currently expect revenues in 2020 to be UK£10.1b, approximately in line with the last 12 months. Earnings per share are expected to shoot up 89% to UK£0.13. Yet prior to the latest earnings, analysts had been forecasting revenues of UK£10.4b and earnings per share (EPS) of UK£0.15 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
Analysts made no major changes to their price target of UK£1.45, suggesting the downgrades are not expected to have a long-term impact on Dixons Carphone's valuation. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Dixons Carphone at UK£2.20 per share, while the most bearish prices it at UK£1.25. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Further, we can compare these estimates to past performance, and see how Dixons Carphone forecasts compare to the wider market's forecast performance. We would highlight that sales are expected to reverse, with the forecast 1.8% revenue decline a notable change from historical growth of 0.8% over the last three years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 3.8% next year. It's pretty clear that Dixons Carphone's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Dixons Carphone. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Dixons Carphone going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether Dixons Carphone's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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