Frontier Developments plc Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year
It's been a good week for Frontier Developments plc (LON:FDEV) shareholders, because the company has just released its latest full-year results, and the shares gained 3.8% to UK£24.50. Revenues were UK£76m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of UK£0.39 were also better than expected, beating analyst predictions by 17%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Frontier Developments
Taking into account the latest results, the consensus forecast from Frontier Developments' nine analysts is for revenues of UK£93.1m in 2021, which would reflect a huge 22% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 4.0% to UK£0.43. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£91.0m and earnings per share (EPS) of UK£0.42 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
It will come as no surprise to learn that the analysts have increased their price target for Frontier Developments 15% to UK£24.47on the back of these upgrades. 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. There are some variant perceptions on Frontier Developments, with the most bullish analyst valuing it at UK£29.50 and the most bearish at UK£17.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. We can infer from the latest estimates that forecasts expect a continuation of Frontier Developments'historical trends, as next year's 22% revenue growth is roughly in line with 28% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So it's pretty clear that Frontier Developments is forecast to grow substantially faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Frontier Developments' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Frontier Developments. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Frontier Developments going out to 2025, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for Frontier Developments you should be aware of.
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. 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.
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