Dream International Limited Just Missed EPS By 32%: Here's What Analysts Think Will Happen Next

Dream International Limited (HKG:1126) missed earnings with its latest full-year results, disappointing overly-optimistic forecasts. Results showed a clear earnings miss, with HK$3.8b revenue coming in 6.4% lower than what the analystexpected. Statutory earnings per share (EPS) of HK$0.40 missed the mark badly, arriving some 32% below what was expected. This is an important time for investors, as they can track a company's performance in its report, look at what expert is 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 analyst has changed their earnings models, following these results.

See our latest analysis for Dream International

Taking into account the latest results, the most recent consensus for Dream International from single analyst is for revenues of HK$4.41b in 2021 which, if met, would be a solid 17% increase on its sales over the past 12 months. Per-share earnings are expected to leap 37% to HK$0.55. In the lead-up to this report, the analyst had been modelling revenues of HK$4.61b and earnings per share (EPS) of HK$0.83 in 2021. The analyst seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the HK$3.80 price target, showing that the analyst doesn't think the changes have a meaningful impact on its intrinsic value.

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 can infer from the latest estimates that forecasts expect a continuation of Dream International'shistorical trends, as the 17% annualised revenue growth to the end of 2021 is roughly in line with the 16% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 11% annually. So although Dream International is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Dream International. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Dream International going out as far as 2022, and you can see them free on our platform here.

Even so, be aware that Dream International is showing 2 warning signs in our investment analysis , you should know about...

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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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