The half-yearly results for Jumbo Interactive Limited (ASX:JIN) were released last week, making it a good time to revisit its performance. It was a credible result overall, with revenues of AU$38m and statutory earnings per share of AU$0.42 both in line with analyst estimates, showing that Jumbo Interactive is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Jumbo Interactive after the latest results.
Following the latest results, Jumbo Interactive's three analysts are now forecasting revenues of AU$78.0m in 2020. This would be a decent 8.0% improvement in sales compared to the last 12 months. Statutory per share are forecast to be AU$0.45, approximately in line with the last 12 months. Before this earnings report, analysts had been forecasting revenues of AU$75.8m and earnings per share (EPS) of AU$0.45 in 2020. So it looks like there's been no major change in sentiment following the latest results, although analysts have made a slight bump in to revenue forecasts.
As a result, it might come as a surprise that the consensus price target has been cut 9.8% to AU$14.95, which could suggest that these earnings are considered less valuable by the market than previously. 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. There are some variant perceptions on Jumbo Interactive, with the most bullish analyst valuing it at AU$21.00 and the most bearish at AU$11.90 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Jumbo Interactive's performance in recent years. It's pretty clear that analysts expect Jumbo Interactive's revenue growth will slow down substantially, with revenues next year expected to grow 8.0%, compared to a historical growth rate of 19% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.5% next year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Jumbo Interactive to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. They also upgraded their revenue forecasts, although the latest estimates suggest that Jumbo Interactive will grow in line with the overall 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Jumbo Interactive. Long-term earnings power is much more important than next year's profits. We have forecasts for Jumbo Interactive going out to 2023, and you can see them free on our platform here.
We also provide an overview of the Jumbo Interactive Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at email@example.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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