Last week, you might have seen that Corporate Travel Management Limited (ASX:CTD) released its interim result to the market. The early response was not positive, with shares down 7.7% to AU$15.67 in the past week. It was not a great result overall. While revenues of AU$222m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 18% to hit AU$0.30 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Following last week's earnings report, Corporate Travel Management's nine analysts are forecasting 2020 revenues to be AU$455.3m, approximately in line with the last 12 months. Statutory earnings per share are expected to reduce 5.2% to AU$0.70 in the same period. Before this earnings report, analysts had been forecasting revenues of AU$496.7m and earnings per share (EPS) of AU$0.96 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 large cut to earnings per share estimates.
The consensus price target fell 10% to AU$21.54, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 Corporate Travel Management, with the most bullish analyst valuing it at AU$29.60 and the most bearish at AU$13.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.9% a significant reduction from annual growth of 19% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 7.8% next year. It's pretty clear that Corporate Travel Management's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Corporate Travel Management. 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. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Corporate Travel Management. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Corporate Travel Management going out to 2023, 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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