Data#3 Limited (ASX:DTL) Just Released Its Interim Results And Analysts Are Updating Their Estimates
One of the biggest stories of last week was how Data#3 Limited (ASX:DTL) shares plunged 22% in the week since its latest half-yearly results, closing yesterday at AU$7.69. Data#3 reported AU$1.3b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of AU$0.14 beat expectations, being 3.0% higher than what the analysts 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Data#3 after the latest results.
Check out our latest analysis for Data#3
Following the latest results, Data#3's eight analysts are now forecasting revenues of AU$2.85b in 2024. This would be a meaningful 9.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 4.4% to AU$0.28. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$2.87b and earnings per share (EPS) of AU$0.29 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at AU$8.05, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Data#3 analyst has a price target of AU$9.15 per share, while the most pessimistic values it at AU$5.50. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Data#3's growth to accelerate, with the forecast 20% annualised growth to the end of 2024 ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Data#3 is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at AU$8.05, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Data#3 analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for Data#3 that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
