As you might know, Frasers Property Limited (SGX:TQ5) last week released its latest annual, and things did not turn out so great for shareholders. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at S$3.8b, earnings missed forecasts by 15%, coming in at just S$0.16 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. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the six analysts covering Frasers Property provided consensus estimates of S$3.43b revenue in 2020, which would reflect an uncomfortable 9.6% decline on its sales over the past 12 months. Earnings per share are forecast to nosedive 46% to S$0.16 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of S$3.64b and earnings per share (EPS) of S$0.17 in 2020. Analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
Despite the cuts to forecast earnings, there was no real change to the S$2.06 price target, showing that analysts don't think the changes have a meaningful impact on the stock's intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Frasers Property analyst has a price target of S$2.30 per share, while the most pessimistic values it at S$1.85. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Frasers Property's performance in recent years. We would highlight that sales are expected to reverse, with the forecast 9.6% revenue decline a notable change from historical growth of 9.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 14% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Frasers Property to grow slower than the wider market.
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 Frasers Property. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at S$2.06, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Frasers Property going out to 2023, and you can see them free on our platform here..
You can also see whether Frasers Property is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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