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Coca-Cola Amatil Limited Just Reported And Analysts Have Been Lifting Their Price Targets

·4 min read

It's been a good week for Coca-Cola Amatil Limited (ASX:CCL) shareholders, because the company has just released its latest full-year results, and the shares gained 8.1% to AU$12.88. Coca-Cola Amatil reported AU$5.1b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of AU$0.52 beat expectations, being 2.4% higher than what analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.

Check out our latest analysis for Coca-Cola Amatil

ASX:CCL Past and Future Earnings, February 21st 2020
ASX:CCL Past and Future Earnings, February 21st 2020

Taking into account the latest results, the most recent consensus for Coca-Cola Amatil from 13 analysts is for revenues of AU$5.31b in 2020, which is a credible 4.4% increase on its sales over the past 12 months. Statutory earnings per share are expected to ascend 11% to AU$0.57. In the lead-up to this report, analysts had been modelling revenues of AU$5.21b and earnings per share (EPS) of AU$0.55 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 11% to AU$11.50, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Coca-Cola Amatil analyst has a price target of AU$14.00 per share, while the most pessimistic values it at AU$9.10. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. For example, we noticed that Coca-Cola Amatil's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 4.4%, well above its historical decline of 1.3% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.2% per year. So it looks like Coca-Cola Amatil is expected to grow at about the same rate as the wider market.

The Bottom Line

The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Coca-Cola Amatil following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Coca-Cola Amatil going out to 2023, and you can see them free on our platform here.

You can also view our analysis of Coca-Cola Amatil's balance sheet, and whether we think Coca-Cola Amatil is carrying too much debt, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.