Earnings Miss: Flutter Entertainment plc Missed EPS And Analysts Are Revising Their Forecasts

The investors in Flutter Entertainment plc's (LON:FLTR) will be rubbing their hands together with glee today, after the share price leapt 24% to UK£107 in the week following its half-yearly results. The results don't look great, especially considering that the analysts had been forecasting a profit and Flutter Entertainment delivered a statutory loss of UK£0.65 per share. Revenues of UK£3.4b did beat expectations by 7.0% though. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Flutter Entertainment after the latest results.

View our latest analysis for Flutter Entertainment

After the latest results, the 17 analysts covering Flutter Entertainment are now predicting revenues of UK£7.22b in 2022. If met, this would reflect a decent 13% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Flutter Entertainment forecast to report a statutory profit of UK£0.28 per share. Before this earnings report, the analysts had been forecasting revenues of UK£7.04b and earnings per share (EPS) of UK£1.63 in 2022. So it's pretty clear the analysts have mixed opinions on Flutter Entertainment after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.

There's been no major changes to the price target of UK£138, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Flutter Entertainment analyst has a price target of UK£160 per share, while the most pessimistic values it at UK£83.60. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 28% growth on an annualised basis. That is in line with its 33% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So it's pretty clear that Flutter Entertainment is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Flutter Entertainment going out to 2024, and you can see them free on our platform here..

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

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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.