Earnings Miss: London Stock Exchange Group plc Missed EPS By 54% And Analysts Are Revising Their Forecasts
London Stock Exchange Group plc (LON:LSEG) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Statutory earnings per share fell badly short of expectations, coming in at UK£1.38, some 54% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at UK£8.4b. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for London Stock Exchange Group
Following the latest results, London Stock Exchange Group's 14 analysts are now forecasting revenues of UK£8.71b in 2024. This would be a credible 3.9% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 63% to UK£2.30. Before this earnings report, the analysts had been forecasting revenues of UK£8.69b and earnings per share (EPS) of UK£3.56 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
The consensus price target held steady at UK£102, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 London Stock Exchange Group at UK£115 per share, while the most bearish prices it at UK£81.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that London Stock Exchange Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.9% growth on an annualised basis. This is compared to a historical growth rate of 34% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.7% per year. Even after the forecast slowdown in growth, it seems obvious that London Stock Exchange Group is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for London Stock Exchange Group. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. 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. We have forecasts for London Stock Exchange Group 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 London Stock Exchange Group 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.
