Earnings Miss: Experian plc Missed EPS By 15% And Analysts Are Revising Their Forecasts

Investors in Experian plc (LON:EXPN) had a good week, as its shares rose 4.0% to close at UK£24.64 following the release of its half-year results. Revenues were in line with forecasts, at US$2.5b, although earnings per share came in 15% below what analysts expected, at US$0.76 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.

View our latest analysis for Experian

LSE:EXPN Past and Future Earnings, November 15th 2019
LSE:EXPN Past and Future Earnings, November 15th 2019

Taking into account the latest results, the most recent consensus for Experian from 14 analysts is for revenues of US$5.18b in 2020, which is a satisfactory 3.8% increase on its sales over the past 12 months. Earnings per share are expected to expand 18% to US$0.95. Yet prior to the latest earnings, analysts had been forecasting revenues of US$5.18b and earnings per share (EPS) of US$0.94 in 2020. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.

Analysts reconfirmed their price target of US$31.21, showing that the business is executing well and in line with expectations. 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 Experian at US$36.51 per share, while the most bearish prices it at US$22.26. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It’s clear from the latest estimates that Experian’s rate of growth is expected to accelerate meaningfully, with forecast 3.8% revenue growth noticeably faster than its historical growth of 1.2%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to see a revenue decline of 5.1% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, analysts also expect Experian to grow slower than the wider market.

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. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Experian’s revenues are expected to perform worse than the wider market. 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 Experian analysts – going out to 2024, and you can see them free on our platform here.

You can also view our analysis of Experian’s balance sheet, and whether we think Experian is carrying too much debt, for free on our platform here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.