Investors in NagaCorp Ltd. (HKG:3918) had a good week, as its shares rose 5.9% to close at HK$11.78 following the release of its yearly results. NagaCorp missed revenue estimates by 3.3%, with sales of US$1.8b, although statutory earnings per share (EPS) of US$0.12 beat expectations, coming in 2.4% ahead of analyst estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the current consensus from NagaCorp's nine analysts is for revenues of US$1.92b in 2020, which would reflect a solid 9.4% increase on its sales over the past 12 months. Statutory earnings per share are expected to accumulate 7.0% to US$0.13. In the lead-up to this report, analysts had been modelling revenues of US$2.13b and earnings per share (EPS) of US$0.13 in 2020. It's pretty clear that analyst sentiment has fallen after the latest results, leading to lower revenue forecasts and a minor downgrade to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$1.93 price target, showing that analysts don't think the changes have a meaningful impact on the stock's intrinsic value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on NagaCorp, with the most bullish analyst valuing it at US$2.13 and the most bearish at US$1.64 per share. 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 NagaCorp's performance in recent years. It's pretty clear that analysts expect NagaCorp's revenue growth will slow down substantially, with revenues next year expected to grow 9.4%, compared to a historical growth rate of 32% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 11% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect NagaCorp 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. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. 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. At Simply Wall St, we have a full range of analyst estimates for NagaCorp going out to 2022, and you can see them free on our platform here..
We also provide an overview of the NagaCorp Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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