Universal Music Group N.V. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Investors in Universal Music Group N.V. (AMS:UMG) had a good week, as its shares rose 3.0% to close at €22.06 following the release of its interim results. Results overall were not great, with earnings of €0.13 per share falling drastically short of analyst expectations. Meanwhile revenues hit €4.7b and were slightly better than forecasts. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Universal Music Group

Taking into account the latest results, the most recent consensus for Universal Music Group from 20 analysts is for revenues of €10.2b in 2022 which, if met, would be a solid 8.2% increase on its sales over the past 12 months. Per-share earnings are expected to soar 87% to €0.70. In the lead-up to this report, the analysts had been modelling revenues of €9.88b and earnings per share (EPS) of €0.73 in 2022. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a solid to revenue, the consensus also made a small dip in its earnings per share forecasts.

There's been no major changes to the price target of €25.99, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Universal Music Group, with the most bullish analyst valuing it at €32.00 and the most bearish at €16.10 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 17% growth on an annualised basis. That is in line with its 21% annual growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 10.0% per year. So it's pretty clear that Universal Music Group is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Universal Music Group. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at €25.99, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Universal Music Group going out to 2024, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Universal Music Group .

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.