Analysts might have been a bit too bullish on Australian Vintage Ltd (ASX:AVG), given that the company fell short of expectations when it released its interim results last week. Australian Vintage missed analyst estimates, with revenues of AU$137m and statutory earnings per share (EPS) of AU$0.028, missing by 5.9% and 6.7% respectively. 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.
Following the latest results, Australian Vintage's two analysts are now forecasting revenues of AU$274.7m in 2020. This would be a reasonable 4.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to surge 34% to AU$0.036. Before this earnings report, analysts had been forecasting revenues of AU$281.1m and earnings per share (EPS) of AU$0.04 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
Analysts made no major changes to their price target of AU$0.48, suggesting the downgrades are not expected to have a long-term impact on Australian Vintage's valuation.
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. It's clear from the latest estimates that Australian Vintage's rate of growth is expected to accelerate meaningfully, with forecast 4.4% revenue growth noticeably faster than its historical growth of 3.3%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to see a revenue decline of 5.8% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, analysts also expect Australian Vintage to grow slower 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. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. 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.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
You can also see whether Australian Vintage is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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