WH Smith PLC Just Missed EPS By 25%: Here's What Analysts Think Will Happen Next
It's been a good week for WH Smith PLC (LON:SMWH) shareholders, because the company has just released its latest yearly results, and the shares gained 2.8% to UK£12.40. It looks like a pretty bad result, all things considered. Although revenues of UK£1.8b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 25% to hit UK£0.60 per share. Following the result, the 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for WH Smith
Following the latest results, WH Smith's eleven analysts are now forecasting revenues of UK£1.94b in 2024. This would be a meaningful 8.3% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 47% to UK£0.89. In the lead-up to this report, the analysts had been modelling revenues of UK£1.93b and earnings per share (EPS) of UK£0.93 in 2024. 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 the analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at UK£18.24, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values WH Smith at UK£23.00 per share, while the most bearish prices it at UK£14.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await WH Smith shareholders.
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. It's clear from the latest estimates that WH Smith's rate of growth is expected to accelerate meaningfully, with the forecast 8.3% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.3% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect WH Smith to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for WH Smith. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for WH Smith going out to 2026, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for WH Smith that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
