Spark New Zealand Limited Just Missed EPS By 9.5%: Here's What Analysts Think Will Happen Next

Spark New Zealand Limited (NZSE:SPK) shareholders are probably feeling a little disappointed, since its shares fell 2.3% to NZ$5.04 in the week after its latest interim results. Revenues of NZ$2.0b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at NZ$0.086, missing estimates by 9.5%. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Spark New Zealand

Taking into account the latest results, Spark New Zealand's eight analysts currently expect revenues in 2024 to be NZ$3.99b, approximately in line with the last 12 months. Per-share earnings are expected to increase 6.5% to NZ$0.25. Before this earnings report, the analysts had been forecasting revenues of NZ$4.02b and earnings per share (EPS) of NZ$0.25 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of NZ$5.25, suggesting that the company has met expectations in its recent result. 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. Currently, the most bullish analyst values Spark New Zealand at NZ$5.65 per share, while the most bearish prices it at NZ$4.90. This is a very narrow spread of estimates, implying either that Spark New Zealand is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that Spark New Zealand's revenue growth is expected to slow, with the forecast 3.1% annualised growth rate until the end of 2024 being well below the historical 4.3% p.a. growth over the last five years. Compare this to the 14 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 3.3% per year. So it's pretty clear that, while Spark New Zealand's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at NZ$5.25, 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 Spark New Zealand. Long-term earnings power is much more important than next year's profits. We have forecasts for Spark New Zealand 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 3 warning signs for Spark New Zealand (of which 1 makes us a bit uncomfortable!) 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.