Results: Arvida Group Limited Beat Earnings Expectations And Analysts Now Have New Forecasts

Arvida Group Limited (NZSE:ARV) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues disappointed slightly, as sales of NZ$208m were 4.4% below what the analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of NZ$0.32 coming in 13% above what was anticipated. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Arvida Group

After the latest results, the four analysts covering Arvida Group are now predicting revenues of NZ$257.5m in 2023. If met, this would reflect a major 24% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to plummet 36% to NZ$0.18 in the same period. Before this earnings report, the analysts had been forecasting revenues of NZ$260.1m and earnings per share (EPS) of NZ$0.11 in 2023. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the massive increase in earnings per share expectations following these results.

The consensus price target fell 5.7% to NZ$2.10, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Arvida Group analyst has a price target of NZ$2.30 per share, while the most pessimistic values it at NZ$1.70. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Arvida Group is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Arvida Group's growth to accelerate, with the forecast 24% annualised growth to the end of 2023 ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Arvida Group to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Arvida Group's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Arvida Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Arvida Group going out to 2025, 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 3 warning signs for Arvida Group (1 shouldn't be ignored!) 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.