Investors in Australian Finance Group Limited (ASX:AFG) had a good week, as its shares rose 3.9% to close at AU$2.00 following the release of its full-year results. Results overall were not great, with earnings of AU$0.14 per share falling drastically short of analyst expectations. Meanwhile revenues hit AU$928m and were slightly better than forecasts. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, Australian Finance Group's three analysts are forecasting 2023 revenues to be AU$921.0m, approximately in line with the last 12 months. Per-share earnings are expected to bounce 77% to AU$0.25. Before this earnings report, the analysts had been forecasting revenues of AU$841.5m and earnings per share (EPS) of AU$0.25 in 2023. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of AU$2.26, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 Australian Finance Group, with the most bullish analyst valuing it at AU$2.56 and the most bearish at AU$1.82 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Australian Finance Group's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 0.7% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 8.6% 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 6.8% per year. It's pretty clear that Australian Finance Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Australian Finance Group following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Australian Finance Group analysts - going out to 2025, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with Australian Finance Group .
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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.
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