Qantas Airways Limited (ASX:QAN) last week reported its latest half-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues were in line with forecasts, at AU$9.5b, although statutory earnings per share came in 17% below what analysts expected, at AU$0.29 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts’ statutory forecasts suggest is in store for next year.
Following last week’s earnings report, Qantas Airways’s ten analysts are forecasting 2020 revenues to be AU$18.1b, approximately in line with the last 12 months. Statutory earnings per share are expected to dip 8.9% to AU$0.51 in the same period. Before this earnings report, analysts had been forecasting revenues of AU$18.4b and earnings per share (EPS) of AU$0.56 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.
The consensus price target held steady at AU$7.02, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic Qantas Airways analyst has a price target of AU$8.00 per share, while the most pessimistic values it at AU$5.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Further, we can compare these estimates to past performance, and see how Qantas Airways forecasts compare to the wider market’s forecast performance. We would highlight that sales are expected to reverse, with the forecast 0.8% revenue decline a notable change from historical growth of 3.1% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 6.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – analysts also expect Qantas Airways 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. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse 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.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Qantas Airways going out to 2023, and you can see them free on our platform here..
You can also see whether Qantas Airways is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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