Australian Finance Group Limited Just Missed EPS By 15%: Here's What Analysts Think Will Happen Next

Australian Finance Group Limited (ASX:AFG) shareholders are probably feeling a little disappointed, since its shares fell 9.8% to AU$1.61 in the week after its latest annual results. Statutory earnings per share of AU$0.14 unfortunately missed expectations by 15%, although it was encouraging to see revenues of AU$1b exceed expectations by 8.8%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Australian Finance Group

Taking into account the latest results, the most recent consensus for Australian Finance Group from three analysts is for revenues of AU$1.12b in 2024. If met, it would imply a decent 12% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 3.6% to AU$0.14. In the lead-up to this report, the analysts had been modelling revenues of AU$919.7m and earnings per share (EPS) of AU$0.16 in 2024. Although revenues are expected to increase meaningfully, the analysts have acknowledged the cost of growth, given the substantial drop in EPS estimates following the latest report.

The consensus price target was unchanged at AU$1.90, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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. The most optimistic Australian Finance Group analyst has a price target of AU$2.22 per share, while the most pessimistic values it at AU$1.61. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Australian Finance Group'shistorical trends, as the 12% annualised revenue growth to the end of 2024 is roughly in line with the 12% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues fall 6.6% per year. So not only is Australian Finance Group expected to maintain its revenue growth despite the wider downturn, it's also forecast to grow faster than the industry as a whole.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider industry. 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. At Simply Wall St, we have a full range of analyst estimates for Australian Finance Group going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for Australian Finance Group (1 is significant!) that 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.