Earnings Miss: Pacific Basin Shipping Limited Missed EPS By 22% And Analysts Are Revising Their Forecasts

It's been a good week for Pacific Basin Shipping Limited (HKG:2343) shareholders, because the company has just released its latest full-year results, and the shares gained 4.4% to HK$2.38. Statutory earnings per share fell badly short of expectations, coming in at US$0.021, some 22% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$2.3b. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Pacific Basin Shipping

Taking into account the latest results, the consensus forecast from Pacific Basin Shipping's seven analysts is for revenues of US$2.37b in 2024. This reflects a reasonable 3.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 50% to US$0.031. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.49b and earnings per share (EPS) of US$0.035 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the HK$2.93 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Pacific Basin Shipping at HK$3.30 per share, while the most bearish prices it at HK$2.60. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the 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. We would highlight that Pacific Basin Shipping's revenue growth is expected to slow, with the forecast 3.0% annualised growth rate until the end of 2024 being well below the historical 17% p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 6.7% per year. Factoring in the forecast slowdown in growth, it's pretty clear that Pacific Basin Shipping is still expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Pacific Basin Shipping. Unfortunately, they also downgraded their revenue estimates, and our data indicates that is expected to perform better 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Pacific Basin Shipping. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Pacific Basin Shipping analysts - going out to 2026, 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 Pacific Basin Shipping you should know about.

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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.