The analysts might have been a bit too bullish on Dart Group PLC (LON:DTG), given that the company fell short of expectations when it released its full-year results last week. Results showed a clear earnings miss, with UK£3.6b revenue coming in 5.8% lower than what the analystsexpected. Statutory earnings per share (EPS) of UK£0.78 missed the mark badly, arriving some 23% below what was expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the four analysts covering Dart Group provided consensus estimates of UK£1.50b revenue in 2021, which would reflect a painful 58% decline on its sales over the past 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -UK£2.18 per share in 2021. Before this earnings announcement, the analysts had been modelling revenues of UK£2.60b and losses of UK£2.17 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.
The average price target fell 11% to UK£10.13, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Dart Group analyst has a price target of UK£10.50 per share, while the most pessimistic values it at UK£10.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 58% revenue decline a notable change from historical growth of 24% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 14% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Dart Group is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Dart Group. 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 Dart Group going out to 2024, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 4 warning signs for Dart Group you should know about.
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. 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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