Analysts might have been a bit too bullish on Bingo Industries Limited (ASX:BIN), given that the company fell short of expectations when it released its half-yearly results last week. Results showed a clear earnings miss, with AU$271m revenue coming in 3.0% lower than what analysts expected. Statutory earnings per share (EPS) of AU$0.039 missed the mark badly, arriving some 47% below what analysts had expected. Following the result, 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 gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
After the latest results, the nine analysts covering Bingo Industries are now predicting revenues of AU$544.2m in 2020. If met, this would reflect a notable 18% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to soar 38% to AU$0.10. In the lead-up to this report, analysts had been modelling revenues of AU$571.1m and earnings per share (EPS) of AU$0.097 in 2020. So it's pretty clear that while sentiment around revenues has declined following the latest results, analysts are now more bullish on the company's earnings power.
There's been no real change to the average price target of AU$3.12, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Bingo Industries, with the most bullish analyst valuing it at AU$3.45 and the most bearish at AU$2.75 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to Bingo Industries's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect Bingo Industries's revenue growth will slow down substantially, with revenues next year expected to grow 18%, compared to a historical growth rate of 31% over the past three years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.5% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkBingo Industries will grow faster than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Bingo Industries's earnings potential next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Still, earnings are more important to the long-term 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. We have estimates - from multiple Bingo Industries analysts - going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether Bingo Industries's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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