British Land Company Plc (LON:BLND) just released its latest yearly results and things are looking bullish. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were UK£603m and the statutory loss per share was UK£1.11, smaller than the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the eight analysts covering British Land, is for revenues of UK£483.7m in 2022, which would reflect a not inconsiderable 20% reduction in British Land's sales over the past 12 months. Per-share statutory losses are expected to explode, reaching UK£0.42 per share. In the lead-up to this report, the analysts had been modelling revenues of UK£486.4m and earnings per share (EPS) of UK£0.058 in 2022. So despite reconfirming their revenue estimates, the analysts are now forecasting a loss instead of a profit, which looks like a definite drop in sentiment following the latest results.
As a result, there was no major change to the consensus price target of UK£4.89, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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. There are some variant perceptions on British Land, with the most bullish analyst valuing it at UK£6.66 and the most bearish at UK£2.85 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We would also point out that the forecast 20% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 25% annually over the past year Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.1% annually. So while a broad number of companies are forecast to grow, unfortunately British Land is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that the analysts are expecting British Land to become unprofitable next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at UK£4.89, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on British Land. Long-term earnings power is much more important than next year's profits. We have forecasts for British Land going out to 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for British Land (of which 1 can't be ignored!) you should know about.
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