Results: MTR Corporation Limited Exceeded Expectations And The Consensus Has Updated Its Estimates

MTR Corporation Limited (HKG:66) defied analyst predictions to release its half-yearly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 3.2% to hit HK$29b. MTR also reported a statutory profit of HK$0.97, which was an impressive 26% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on MTR after the latest results.

See our latest analysis for MTR

Taking into account the latest results, MTR's eleven analysts currently expect revenues in 2024 to be HK$58.8b, approximately in line with the last 12 months. Statutory earnings per share are predicted to jump 42% to HK$2.21. Yet prior to the latest earnings, the analysts had been anticipated revenues of HK$58.8b and earnings per share (EPS) of HK$2.16 in 2024. So the consensus seems to have become somewhat more optimistic on MTR's earnings potential following these results.

There's been no major changes to the consensus price target of HK$28.35, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 MTR, with the most bullish analyst valuing it at HK$33.90 and the most bearish at HK$20.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that MTR's revenue growth is expected to slow, with the forecast 0.4% annualised growth rate until the end of 2024 being well below the historical 2.0% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.3% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than MTR.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards MTR following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at HK$28.35, 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 MTR. Long-term earnings power is much more important than next year's profits. We have forecasts for MTR going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for MTR that you need to take into consideration.

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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.