Yahoo Finance Earnings Miss: Shaftesbury PLC Missed EPS By 77% And Analysts Are Revising Their Forecasts
Analysts might have been a bit too bullish on Shaftesbury PLC (LON:SHB), given that the company fell short of expectations when it released its full-year results last week. Results showed a clear earnings miss, with UK£127m revenue coming in 2.0% lower than what analysts expected. Earnings per share (EPS) of UK£0.085 missed the mark badly, arriving some 77% below what analysts had expected. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.
Check out our latest analysis for Shaftesbury
Taking into account the latest results, the latest consensus from Shaftesbury's five analysts is for revenues of UK£138.0m in 2020, which would reflect a decent 8.7% improvement in sales compared to the last 12 months. Earnings per share are expected to jump 571% to UK£0.57. Yet prior to the latest earnings, analysts had been forecasting revenues of UK£138.0m and earnings per share (EPS) of UK£0.37 in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the considerable lift to earnings per share expectations following these results.
There's been no major changes to the consensus price target of UK£8.68, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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. The most optimistic Shaftesbury analyst has a price target of UK£10.25 per share, while the most pessimistic values it at UK£7.35. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Shaftesbury shareholders.
Further, we can compare these estimates to past performance, and see how Shaftesbury forecasts compare to the wider market's forecast performance. Analysts are definitely expecting Shaftesbury's growth to accelerate, with the forecast 8.7% growth ranking favourably alongside historical growth of 6.7% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.9% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Shaftesbury is expected to grow much faster than its market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Shaftesbury's earnings potential next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at UK£8.68, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Shaftesbury. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Shaftesbury analysts - going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Shaftesbury'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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