Public Joint Stock Company Aeroflot - Russian Airlines (MCX:AFLT) Just Reported And Analysts Have Been Cutting Their Estimates

Public Joint Stock Company Aeroflot - Russian Airlines (MCX:AFLT) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a pretty bad result overall; while revenues were in line with expectations at ₽302b, statutory losses exploded to ₽87.67 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Aeroflot - Russian Airlines

Taking into account the latest results, the consensus forecast from Aeroflot - Russian Airlines' ten analysts is for revenues of ₽442.8b in 2021, which would reflect a sizeable 47% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 55% to ₽39.62. Before this latest report, the consensus had been expecting revenues of ₽553.2b and ₽11.86 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target was broadly unchanged at US$1.04, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Aeroflot - Russian Airlines analyst has a price target of US$98.37 per share, while the most pessimistic values it at US$50.73. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Aeroflot - Russian Airlines' rate of growth is expected to accelerate meaningfully, with the forecast 47% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 3.2% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 32% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Aeroflot - Russian Airlines to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at ₽1.04, 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 estimates - from multiple Aeroflot - Russian Airlines analysts - going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Aeroflot - Russian Airlines that you should be aware of.

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