Reckitt Benckiser Group plc Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Reckitt Benckiser Group plc (LON:RKT) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like the results were a bit of a negative overall. While revenues of UK£14b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.3% to hit UK£3.25 per share. 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 Reckitt Benckiser Group after the latest results.

See our latest analysis for Reckitt Benckiser Group

Taking into account the latest results, the consensus forecast from Reckitt Benckiser Group's 16 analysts is for revenues of UK£14.9b in 2023, which would reflect an okay 3.3% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 3.1% to UK£3.36. In the lead-up to this report, the analysts had been modelling revenues of UK£14.8b and earnings per share (EPS) of UK£3.41 in 2023. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of UK£68.11, suggesting that the company has met expectations in its recent result. 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 Reckitt Benckiser Group analyst has a price target of UK£80.00 per share, while the most pessimistic values it at UK£49.75. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Reckitt Benckiser Group'shistorical trends, as the 3.3% annualised revenue growth to the end of 2023 is roughly in line with the 3.2% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 3.3% annually. It's clear that while Reckitt Benckiser Group's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Reckitt Benckiser Group going out to 2025, and you can see them free on our platform here..

It is also worth noting that we have found 1 warning sign for Reckitt Benckiser Group that you need to take into consideration.

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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.