Think Childcare Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
As you might know, Think Childcare Limited (ASX:TNK) recently reported its full-year numbers. Results overall were not great, with earnings of AU$0.035 per share falling drastically short of analyst expectations. Meanwhile revenues hit AU$116m and were slightly better than forecasts. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
View our latest analysis for Think Childcare
Taking into account the latest results, the latest consensus from Think Childcare's three analysts is for revenues of AU$142.2m in 2020, which would reflect a major 23% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shoot up 220% to AU$0.11. Before this earnings report, analysts had been forecasting revenues of AU$144.8m and earnings per share (EPS) of AU$0.11 in 2020. So the consensus seems to have become somewhat more optimistic on Think Childcare's earnings potential following these results.
The consensus price target was unchanged at AU$1.59, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Think Childcare, with the most bullish analyst valuing it at AU$1.83 and the most bearish at AU$1.44 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Think Childcare's performance in recent years. We can infer from the latest estimates that analysts are expecting a continuation of Think Childcare's historical trends, as next year's forecast 23% revenue growth is roughly in line with 25% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 12% next year. So although Think Childcare is expected to maintain its revenue growth rate, it's definitely expected to 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 Think Childcare's earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Think Childcare's revenues are expected to grow faster than the wider market. 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. We have forecasts for Think Childcare going out to 2021, and you can see them free on our platform here.
You can also see whether Think Childcare 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.
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