Last week, you might have seen that AusNet Services Ltd (ASX:AST) released its full-year result to the market. The early response was not positive, with shares down 3.8% to AU$1.88 in the past week. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 2.2%to hit AU$2.0b. The 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 the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, AusNet Services' eleven analysts currently expect revenues in 2021 to be AU$1.97b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 7.7% to AU$0.073 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$1.99b and earnings per share (EPS) of AU$0.076 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at AU$1.84, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on AusNet Services, with the most bullish analyst valuing it at AU$2.10 and the most bearish at AU$1.57 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.2%, a significant reduction from annual growth of 0.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.5% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - AusNet Services is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that AusNet Services' revenues are expected to perform worse than the wider industry. The consensus price target held steady at AU$1.84, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that 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 AusNet Services going out to 2025, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 3 warning signs for AusNet Services that you should be aware of.
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