Vodafone Qatar P.Q.S.C. (DSM:VFQS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the upgrade, the current consensus from Vodafone Qatar P.Q.S.C's twin analysts is for revenues of ر.ق2.7b in 2022 which - if met - would reflect an okay 2.4% increase on its sales over the past 12 months. Per-share earnings are expected to increase 3.2% to ر.ق0.09. Prior to this update, the analysts had been forecasting revenues of ر.ق2.4b and earnings per share (EPS) of ر.ق0.07 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of ر.ق1.94, suggesting that the forecast performance does not have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Vodafone Qatar P.Q.S.C analyst has a price target of ر.ق2.17 per share, while the most pessimistic values it at ر.ق1.80. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Vodafone Qatar P.Q.S.C is an easy business to forecast or the underlying assumptions are obvious.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Vodafone Qatar P.Q.S.C's revenue growth is expected to slow, with the forecast 3.2% annualised growth rate until the end of 2022 being well below the historical 4.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.5% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Vodafone Qatar P.Q.S.C.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Vodafone Qatar P.Q.S.C could be a good candidate for more research.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Vodafone Qatar P.Q.S.C going out as far as 2024, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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