Duxton Water Limited Just Missed EPS By 32%: Here's What Analysts Think Will Happen Next

As you might know, Duxton Water Limited (ASX:D2O) last week released its latest full-year, and things did not turn out so great for shareholders. Unfortunately, Duxton Water delivered a serious earnings miss. Revenues of AU$21m were 18% below expectations, and statutory earnings per share of AU$0.048 missed estimates by 32%. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is 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 estimate to see what could be in store for next year.

See our latest analysis for Duxton Water

Following the latest results, Duxton Water's single analyst are now forecasting revenues of AU$25.6m in 2024. This would be a substantial 22% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 52% to AU$0.063. In the lead-up to this report, the analyst had been modelling revenues of AU$29.7m and earnings per share (EPS) of AU$0.078 in 2024. Indeed, we can see that the analyst is a lot more bearish about Duxton Water's prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.

The average price target climbed 62% to AU$1.78despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Duxton Water's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 22% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 29% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.1% annually. So it looks like Duxton Water is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Duxton Water. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Duxton Water. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for Duxton Water you should be aware of, and 1 of them is a bit concerning.

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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.