Worley Limited Just Missed Earnings - But Analysts Have Updated Their Models
It's been a good week for Worley Limited (ASX:WOR) shareholders, because the company has just released its latest half-yearly results, and the shares gained 9.5% to AU$17.43. It looks like a pretty bad result, all things considered. Although revenues of AU$6.1b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 51% to hit AU$0.20 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Worley
Taking into account the latest results, Worley's ten analysts currently expect revenues in 2024 to be AU$12.0b, approximately in line with the last 12 months. Per-share earnings are expected to bounce 40% to AU$0.64. In the lead-up to this report, the analysts had been modelling revenues of AU$11.8b and earnings per share (EPS) of AU$0.72 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at AU$18.08, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Worley, with the most bullish analyst valuing it at AU$22.00 and the most bearish at AU$13.25 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 1.0% by the end of 2024. This indicates a significant reduction from annual growth of 6.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Worley is expected to lag 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 Worley. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at AU$18.08, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Worley 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 Worley 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.
