The analysts covering Sun Life Financial Inc. (TSE:SLF) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, Sun Life Financial's ten analysts currently expect revenues in 2022 to be CA$34b, approximately in line with the last 12 months. Statutory earnings per share are supposed to descend 11% to CA$5.82 in the same period. Before this latest update, the analysts had been forecasting revenues of CA$40b and earnings per share (EPS) of CA$5.85 in 2022. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a measurable cut to revenues and some minor tweaks to earnings numbers.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sun Life Financial's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 1.4% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 8.5% 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 15% annually for the foreseeable future. It's pretty clear that Sun Life Financial's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Sun Life Financial going forwards.
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 Sun Life Financial analysts - going out to 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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