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Flutter Entertainment plc Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models

Simply Wall St

It's been a mediocre week for Flutter Entertainment plc (ISE:FLTR) shareholders, with the stock dropping 11% to €95.98 in the week since its latest full-year results. It was not a great result overall. While revenues of UK£2.1b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 20% to hit UK£1.83 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.

View our latest analysis for Flutter Entertainment

ISE:FLTR Past and Future Earnings, February 29th 2020

Taking into account the latest results, the current consensus from Flutter Entertainment's 14 analysts is for revenues of UK£2.35b in 2020, which would reflect a decent 10.0% increase on its sales over the past 12 months. Statutory earnings per share are expected to jump 49% to UK£2.74. Yet prior to the latest earnings, analysts had been forecasting revenues of UK£2.40b and earnings per share (EPS) of UK£2.87 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.

The average analyst price target fell 24% to €95.91, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. There are some variant perceptions on Flutter Entertainment, with the most bullish analyst valuing it at €95.91 and the most bearish at €95.91 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.

Further, we can compare these estimates to past performance, and see how Flutter Entertainment forecasts compare to the wider market's forecast performance. We would highlight that Flutter Entertainment's revenue growth is expected to slow, with forecast 10.0% increase next year well below the historical 22%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 6.1% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkFlutter Entertainment will grow faster than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Flutter Entertainment's revenues are expected to grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Flutter Entertainment going out to 2023, and you can see them free on our platform here..

It might also be worth considering whether Flutter Entertainment'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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