Wharf Real Estate Investment Company Limited Just Missed EPS By 19%: Here's What Analysts Think Will Happen Next

As you might know, Wharf Real Estate Investment Company Limited (HKG:1997) last week released its latest annual, and things did not turn out so great for shareholders. Wharf Real Estate Investment missed earnings this time around, with HK$13b revenue coming in 2.1% below what the analysts had modelled. Statutory earnings per share (EPS) of HK$1.57 also fell short of expectations by 19%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Wharf Real Estate Investment after the latest results.

View our latest analysis for Wharf Real Estate Investment

Following the latest results, Wharf Real Estate Investment's 15 analysts are now forecasting revenues of HK$13.8b in 2024. This would be an okay 4.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 44% to HK$2.27. In the lead-up to this report, the analysts had been modelling revenues of HK$14.2b and earnings per share (EPS) of HK$2.33 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The analysts made no major changes to their price target of HK$34.59, suggesting the downgrades are not expected to have a long-term impact on Wharf Real Estate Investment's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Wharf Real Estate Investment analyst has a price target of HK$48.60 per share, while the most pessimistic values it at HK$28.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Wharf Real Estate Investment shareholders.

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. One thing stands out from these estimates, which is that Wharf Real Estate Investment is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.7% annualised growth until the end of 2024. If achieved, this would be a much better result than the 5.3% annual decline 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 revenue grow 6.7% per year. Although Wharf Real Estate Investment's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at HK$34.59, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Wharf Real Estate Investment going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 2 warning signs for Wharf Real Estate Investment that you need to be mindful of.

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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.