Estia Health Limited Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
Estia Health Limited (ASX:EHE) just released its latest half-year report and things are not looking great. Results showed a clear earnings miss, with AU$289m revenue coming in 6.5% lower than what analysts expected. Statutory earnings per share (EPS) of AU$0.055 missed the mark badly, arriving some 31% below what analysts had expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
See our latest analysis for Estia Health
Taking into account the latest results, Estia Health's four analysts currently expect revenues in 2020 to be AU$605.4m, approximately in line with the last 12 months. Statutory earnings per share are expected to fall 11% to AU$0.12 in the same period. Before this earnings report, analysts had been forecasting revenues of AU$618.7m and earnings per share (EPS) of AU$0.14 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
Analysts made no major changes to their price target of AU$2.44, suggesting the downgrades are not expected to have a long-term impact on Estia Health's valuation. 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. There are some variant perceptions on Estia Health, with the most bullish analyst valuing it at AU$2.69 and the most bearish at AU$2.15 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.
Further, we can compare these estimates to past performance, and see how Estia Health forecasts compare to the wider market's forecast performance. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.1% a significant reduction from annual growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 5.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Estia Health 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. We have estimates - from multiple Estia Health analysts - going out to 2022, and you can see them free on our platform here.
You can also see whether Estia Health is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
