Nine Entertainment Co. Holdings Limited Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders might have noticed that Nine Entertainment Co. Holdings Limited (ASX:NEC) filed its interim result this time last week. The early response was not positive, with shares down 3.3% to AU$2.03 in the past week. Revenues of AU$1.4b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at AU$0.11, missing estimates by 6.0%. The 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Nine Entertainment Holdings

Following last week's earnings report, Nine Entertainment Holdings' twelve analysts are forecasting 2023 revenues to be AU$2.74b, approximately in line with the last 12 months. Statutory earnings per share are predicted to rise 2.8% to AU$0.17. Before this earnings report, the analysts had been forecasting revenues of AU$2.78b and earnings per share (EPS) of AU$0.19 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at AU$2.60, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Nine Entertainment Holdings, with the most bullish analyst valuing it at AU$3.21 and the most bearish at AU$1.84 per share. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 2.3% by the end of 2023. This indicates a significant reduction from annual growth of 14% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.8% annually for the foreseeable future. It's pretty clear that Nine Entertainment Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Nine Entertainment Holdings. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Nine Entertainment Holdings' revenues are expected to perform worse 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. We have estimates - from multiple Nine Entertainment Holdings analysts - going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Nine Entertainment Holdings that we have uncovered.

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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.