The latest analyst coverage could presage a bad day for Jardine Cycle & Carriage Limited (SGX:C07), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the consensus from Jardine Cycle & Carriage's three analysts is for revenues of US$16b in 2020, which would reflect an uneasy 14% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to plunge 29% to US$1.59 in the same period. Before this latest update, the analysts had been forecasting revenues of US$18b and earnings per share (EPS) of US$1.94 in 2020. Indeed, we can see that the analysts are a lot more bearish about Jardine Cycle & Carriage's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
It'll come as no surprise then, to learn that the analysts have cut their price target 9.5% to US$19.52. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Jardine Cycle & Carriage at US$28.76 per share, while the most bearish prices it at US$14.09. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 14%, a significant reduction from annual growth of 2.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.5% annually for the foreseeable future. It's pretty clear that Jardine Cycle & Carriage's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Jardine Cycle & Carriage. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Jardine Cycle & Carriage.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Jardine Cycle & Carriage's business, like a weak balance sheet. Learn more, and discover the 3 other flags we've identified, for free on our platform here.
We also provide an overview of the Jardine Cycle & Carriage Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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