ComfortDelGro Corporation Limited (SGX:C52) shares fell 3.7% to S$2.09 in the week since its latest full-year results. It looks like the results were a bit of a negative overall. While revenues of S$3.9b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 9.6% to hit S$0.12 per share. 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Following last week's earnings report, ComfortDelGro's twelve analysts are forecasting 2020 revenues to be S$3.88b, approximately in line with the last 12 months. Statutory earnings per share are expected to accumulate 4.6% to S$0.13. Before this earnings report, analysts had been forecasting revenues of S$4.04b and earnings per share (EPS) of S$0.14 in 2020. Analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
Despite the cuts to forecast earnings, there was no real change to the S$2.43 price target, showing that analysts don't think the changes have a meaningful impact on the stock's intrinsic value. 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 ComfortDelGro analyst has a price target of S$2.81 per share, while the most pessimistic values it at S$2.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. One more thing stood out to us about these estimates, and it's that ComfortDelGro's decline is expected to slow down, with revenues forecast to fall 0.6% next year, improving on a historical decline of 1.9% a year over the past five years. Compare this against analyst estimates for companies in the wider market, which suggest that revenues (in aggregate) are expected to decline 3.3% next year. So while it's not great to see that analysts are expecting a decline, at least ComfortDelGro is forecast to shrink at a slower rate 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for ComfortDelGro going out to 2022, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, 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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