Analysts Have Lowered Expectations For Toys"R"Us ANZ Limited (ASX:TOY) After Its Latest Results

Toys"R"Us ANZ Limited (ASX:TOY) missed earnings with its latest annual results, disappointing overly-optimistic forecasters. It definitely looks like a negative result overall with revenues falling 18% short of analyst estimates at AU$38m. Statutory losses were AU$0.029 per share, 189% bigger than what the analysts expected. 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. 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 ToysRUs ANZ

Following the latest results, ToysRUs ANZ's three analysts are now forecasting revenues of AU$66.5m in 2023. This would be a sizeable 75% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 65% to AU$0.01. Before this latest report, the consensus had been expecting revenues of AU$77.8m and AU$0.0073 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The consensus price target fell 17% to AU$0.13, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. Currently, the most bullish analyst values ToysRUs ANZ at AU$0.14 per share, while the most bearish prices it at AU$0.12. This is a very narrow spread of estimates, implying either that ToysRUs ANZ is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 ToysRUs ANZ is forecast to grow faster in the future than it has in the past, with revenues expected to display 75% annualised growth until the end of 2023. If achieved, this would be a much better result than the 18% 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 4.7% per year. So it looks like ToysRUs ANZ is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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 ToysRUs ANZ's future valuation.

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 ToysRUs ANZ analysts - going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - ToysRUs ANZ 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.