Earnings Miss: Lendlease Group Missed EPS And Analysts Are Revising Their Forecasts

There's been a notable change in appetite for Lendlease Group (ASX:LLC) shares in the week since its half-yearly report, with the stock down 15% to AU$6.20. Revenues beat expectations by 15% to hit AU$4.8b, although earnings fell badly short, with Lendlease Group reported a statutory loss of AU$0.20 per share even though the analysts had been forecasting a profit. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Lendlease Group

Following the latest results, Lendlease Group's nine analysts are now forecasting revenues of AU$10.9b in 2024. This would be a satisfactory 7.3% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Lendlease Group forecast to report a statutory profit of AU$0.67 per share. Before this earnings report, the analysts had been forecasting revenues of AU$10.4b and earnings per share (EPS) of AU$0.82 in 2024. So it's pretty clear the analysts have mixed opinions on Lendlease Group after the latest results; even though they upped their revenue numbers, it came at the cost of a real cut to per-share earnings expectations.

The analysts also cut Lendlease Group's price target 11% to AU$7.98, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in revenue. 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. There are some variant perceptions on Lendlease Group, with the most bullish analyst valuing it at AU$13.30 and the most bearish at AU$7.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. One thing stands out from these estimates, which is that Lendlease Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 15% annualised growth until the end of 2024. If achieved, this would be a much better result than the 10% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.5% per year. Not only are Lendlease Group's revenues expected to improve, it seems that the analysts are also expecting it to grow faster 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 Lendlease Group. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Lendlease Group's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Lendlease Group analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Lendlease Group that you need to take into consideration.

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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.