Gateway Distriparks Limited (NSE:GDL) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like a pretty bad result, all things considered. Although revenues of ₹3.3b were in line with analyst predictions, earnings fell badly short, missing estimates by 36% to hit ₹1.56 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings consensus estimates to see what could be in store for next year.
Following the latest results, Gateway Distriparks's nine analysts are now forecasting revenues of ₹13.9b in 2020. This would be a sizeable 51% improvement in sales compared to the last 12 months. Earnings per share are forecast to crater 75% to ₹9.05 in the same period. In the lead-up to this report, analysts had been modelling revenues of ₹13.0b and earnings per share (EPS) of ₹9.66 in 2020. So it's pretty clear consensus is mixed on Gateway Distriparks after the latest results; while analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
There's been no major changes to an analyst price target of ₹161, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Gateway Distriparks analyst has a price target of ₹310 per share, while the most pessimistic values it at ₹107. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't assign too much meaning to the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Gateway Distriparks's performance in recent years. For example, we noticed that Gateway Distriparks's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 51%, well above its historical decline of 17% a year 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 12% next year. So it looks like Gateway Distriparks is expected to grow faster than its competitors, at least for a while.
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. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. The consensus price target held steady at ₹161, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Gateway Distriparks. 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 Gateway Distriparks going out to 2022, and you can see them free on our platform here..
You can also see whether Gateway Distriparks is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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