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frontdoor, inc. Just Released Its Full-Year Earnings: Here's What Analysts Think

Simply Wall St
·4 min read

Last week, you might have seen that frontdoor, inc. (NASDAQ:FTDR) released its full-year result to the market. The early response was not positive, with shares down 6.7% to US$43.55 in the past week. The result was positive overall - although revenues of US$1.4b were in line with what analysts predicted, frontdoor surprised by delivering a statutory profit of US$1.80 per share, modestly greater than expected. 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 statutory forecasts to see what analysts are expecting for next year.

Check out our latest analysis for frontdoor

NasdaqGS:FTDR Past and Future Earnings, February 28th 2020
NasdaqGS:FTDR Past and Future Earnings, February 28th 2020

Taking into account the latest results, the latest consensus from frontdoor's eleven analysts is for revenues of US$1.48b in 2020, which would reflect a decent 8.5% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$1.83, roughly flat on the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$1.48b and earnings per share (EPS) of US$1.90 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 small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$52.20, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 frontdoor analyst has a price target of US$56.00 per share, while the most pessimistic values it at US$47.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

Further, we can compare these estimates to past performance, and see how frontdoor forecasts compare to the wider market's forecast performance. Next year brings more of the same, according to analysts, with revenue forecast to grow 8.5%, in line with its 9.5% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 18% per year. So although frontdoor is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that frontdoor's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$52.20, 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 frontdoor analysts - going out to 2024, and you can see them free on our platform here.

You can also see whether frontdoor is carrying too much debt, and whether its balance sheet is healthy, for free on our 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.