Earnings Miss: oOh!media Limited Missed EPS By 67% And Analysts Are Revising Their Forecasts
It's been a good week for oOh!media Limited (ASX:OML) shareholders, because the company has just released its latest full-year results, and the shares gained 2.4% to AU$2.98. It looks like a pretty bad result, all things considered. Although revenues of AU$650m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 67% to hit AU$0.056 per share. 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 analysts' statutory forecasts suggest is in store for next year.
View our latest analysis for oOh!media
Taking into account the latest results, the most recent consensus for oOh!media from six analysts is for revenues of AU$663.1m in 2020, which is an okay 2.1% increase on its sales over the past 12 months. Statutory earnings per share are expected to leap 151% to AU$0.14. Yet prior to the latest earnings, analysts had been forecasting revenues of AU$671.8m and earnings per share (EPS) of AU$0.22 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
The consensus price target held steady at AU$3.87, with 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 oOh!media at AU$4.65 per share, while the most bearish prices it at AU$3.00. This shows there is still quite 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.
It can also be useful to step back and take a broader view of how analyst forecasts compare to oOh!media's performance in recent years. It's pretty clear that analysts expect oOh!media's revenue growth will slow down substantially, with revenues next year expected to grow 2.1%, compared to a historical growth rate of 19% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 3.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than oOh!media.
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 oOh!media. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at AU$3.87, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple oOh!media analysts - going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether oOh!media's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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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