Revenue Miss: CD Projekt S.A. Fell 18% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

Simply Wall St
November 28, 2020

CD Projekt S.A. (WSE:CDR) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. CD Projekt reported an earnings miss, with zł105m revenues falling 18% short of analyst models, and statutory earnings per share (EPS) of zł0.23 also coming in slightly below expectations. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for CD Projekt

WSE:CDR Earnings and Revenue Growth November 28th 2020

Taking into account the latest results, the current consensus from CD Projekt's 16 analysts is for revenues of zł2.91b in 2021, which would reflect a sizeable 327% increase on its sales over the past 12 months. Per-share earnings are expected to jump 535% to zł18.44. Yet prior to the latest earnings, the analysts had been anticipated revenues of zł2.88b and earnings per share (EPS) of zł18.16 in 2021. 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.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at zł400. 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 CD Projekt, with the most bullish analyst valuing it at zł520 and the most bearish at zł304 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that CD Projekt is forecast to grow faster in the future than it has in the past, with revenues expected to grow 327%. If achieved, this would be a much better result than the 6.1% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 4.7% next year. Not only are CD Projekt's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for CD Projekt going out to 2024, 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 1 warning sign for CD Projekt that you need to be mindful of.

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This article by Simply Wall St is general in nature. 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.
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