Shaftesbury PLC (LON:SHB) Analysts Are Cutting Their Estimates: Here's What You Need To Know

The yearly results for Shaftesbury PLC (LON:SHB) were released last week, making it a good time to revisit its performance. Results overall weren't great; even though revenues of UK£125m beat expectations by 13%, statutory losses ballooned to UK£2.28 per share, substantially worse than the analysts had expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Shaftesbury

Taking into account the latest results, the six analysts covering Shaftesbury provided consensus estimates of UK£94.5m revenue in 2021, which would reflect a disturbing 24% decline on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 76% to UK£0.55. Before this latest report, the consensus had been expecting revenues of UK£119.2m and UK£0.45 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target was broadly unchanged at UK£5.65, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 Shaftesbury at UK£9.00 per share, while the most bearish prices it at UK£4.67. 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.

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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 24%, a significant reduction from annual growth of 5.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.8% next year. It's pretty clear that Shaftesbury's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Shaftesbury. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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. We have estimates - from multiple Shaftesbury analysts - going out to 2022, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Shaftesbury (at least 1 which is a bit concerning) , and understanding these should be part of your investment process.

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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. 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.
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