ComfortDelGro Corporation Limited (SGX:C52) shares fell 2.9% to S$2.32 in the week since its latest third-quarter results. Results look mixed - while revenue fell marginally short of analyst estimates at S$979m, earnings beat expectations 2.2%, with ComfortDelGro reporting profits of S$0.14 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
After the latest results, the 14 analysts covering ComfortDelGro are now predicting revenues of S$4.07b in 2020. If met, this would reflect a satisfactory 3.8% improvement in sales compared to the last 12 months. Earnings per share are expected to accumulate 4.8% to S$0.15. Yet prior to the latest earnings, analysts had been forecasting revenues of S$4.08b and earnings per share (EPS) of S$0.15 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at S$2.61, 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. There are some variant perceptions on ComfortDelGro, with the most bullish analyst valuing it at S$2.99 and the most bearish at S$2.28 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to ComfortDelGro's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. One thing stands out from these estimates, which is that analysts are forecasting ComfortDelGro to grow faster in the future than it has in the past, with revenues expected to grow 3.8%. If achieved, this would be a much better result than the 2.0% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 2.2% next year. So it looks like ComfortDelGro is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ComfortDelGro. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. 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.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple ComfortDelGro analysts - going out to 2021, and you can see them free on our platform here.
You can also view our analysis of ComfortDelGro's balance sheet, and whether we think ComfortDelGro is carrying too much debt, for free on our platform here.
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