Viva Leisure Limited (ASX:VVA) Released Earnings Last Week And Analysts Lifted Their Price Target To AU$2.70

It's been a pretty great week for Viva Leisure Limited (ASX:VVA) shareholders, with its shares surging 10% to AU$1.45 in the week since its latest annual results. It was an okay result overall, with revenues coming in at AU$141m, roughly what the analysts had been expecting. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Viva Leisure

After the latest results, the three analysts covering Viva Leisure are now predicting revenues of AU$166.5m in 2024. If met, this would reflect a notable 18% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 111% to AU$0.08. Before this earnings report, the analysts had been forecasting revenues of AU$159.7m and earnings per share (EPS) of AU$0.075 in 2024. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

It will come as no surprise to learn that the analysts have increased their price target for Viva Leisure 7.3% to AU$2.70on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Viva Leisure, with the most bullish analyst valuing it at AU$3.00 and the most bearish at AU$2.39 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Viva Leisure is an easy business to forecast or the the analysts are all using similar assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Viva Leisure's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 18% growth on an annualised basis. This is compared to a historical growth rate of 41% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.4% per year. So it's pretty clear that, while Viva Leisure's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Viva Leisure's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Viva Leisure going out to 2026, and you can see them free on our platform here..

You still need to take note of risks, for example - Viva Leisure has 1 warning sign we think 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.