Earnings Update: Conduit Holdings Limited (LON:CRE) Just Reported Its Interim Results And Analysts Are Updating Their Forecasts
Conduit Holdings Limited (LON:CRE) defied analyst predictions to release its half-yearly results, which were ahead of market expectations. It looks like a positive result overall, with revenues of US$210m beating forecasts by 8.2%. Statutory losses of US$0.37 per share were 8.2% smaller than the analysts expected, likely helped along by the higher revenues. 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.
See our latest analysis for Conduit Holdings
Taking into account the latest results, the most recent consensus for Conduit Holdings from six analysts is for revenues of US$457.5m in 2022 which, if met, would be a huge 51% increase on its sales over the past 12 months. Statutory losses are forecast to balloon 74% to US$0.14 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$462.3m and earnings per share (EPS) of US$0.075 in 2022. So despite reconfirming their revenue estimates, the analysts are now forecasting a loss instead of a profit, which looks like a definite drop in sentiment following the latest results.
As a result, there was no major change to the consensus price target of UK£4.99, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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. Currently, the most bullish analyst values Conduit Holdings at UK£5.60 per share, while the most bearish prices it at UK£4.07. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. It's pretty clear that there is an expectation that Conduit Holdings' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 129% growth on an annualised basis. This is compared to a historical growth rate of 219% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% per year. Even after the forecast slowdown in growth, it seems obvious that Conduit Holdings is also expected to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Conduit Holdings dropped from profits to a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at UK£4.99, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Conduit Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Conduit Holdings analysts - 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 1 warning sign for Conduit Holdings you should know about.
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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.
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