Analysts Are Updating Their Lloyds Banking Group plc (LON:LLOY) Estimates After Its Yearly Results
It's been a good week for Lloyds Banking Group plc (LON:LLOY) shareholders, because the company has just released its latest full-year results, and the shares gained 5.3% to UK£0.45. Results look mixed - while revenue fell marginally short of analyst estimates at UK£18b, statutory earnings were in line with expectations, at UK£0.075 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Lloyds Banking Group after the latest results.
Check out our latest analysis for Lloyds Banking Group
Following last week's earnings report, Lloyds Banking Group's 15 analysts are forecasting 2024 revenues to be UK£18.4b, approximately in line with the last 12 months. Statutory earnings per share are forecast to fall 17% to UK£0.064 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£18.6b and earnings per share (EPS) of UK£0.061 in 2024. So the consensus seems to have become somewhat more optimistic on Lloyds Banking Group's earnings potential following these results.
The consensus price target was unchanged at UK£0.59, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Lloyds Banking Group analyst has a price target of UK£0.80 per share, while the most pessimistic values it at UK£0.41. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Lloyds Banking Group's revenue growth is expected to slow, with the forecast 0.5% annualised growth rate until the end of 2024 being well below the historical 2.6% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that Lloyds Banking Group is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Lloyds Banking Group's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. 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.
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. We have forecasts for Lloyds Banking Group going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Lloyds Banking Group (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
