City Developments Limited Just Missed Earnings - But Analysts Have Updated Their Models

Last week, you might have seen that City Developments Limited (SGX:C09) released its yearly result to the market. The early response was not positive, with shares down 8.3% to S$5.67 in the past week. City Developments beat revenue forecasts by a solid 19% to hit S$4.9b. Statutory earnings per share fell 15% short of expectations, at S$0.33. 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 City Developments

After the latest results, the consensus from City Developments' twelve analysts is for revenues of S$3.69b in 2024, which would reflect a concerning 25% decline in revenue compared to the last year of performance. Statutory earnings per share are predicted to rise 7.5% to S$0.38. Yet prior to the latest earnings, the analysts had been anticipated revenues of S$3.53b and earnings per share (EPS) of S$0.44 in 2024. While next year's revenue estimates increased, there was also a substantial drop in EPS expectations, suggesting the consensus has a bit of a mixed view of these results.

There's been no major changes to the price target of S$7.73, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' 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. Currently, the most bullish analyst values City Developments at S$10.50 per share, while the most bearish prices it at S$5.70. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the City Developments' past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 25% annualised decline to the end of 2024. That is a notable change from historical growth of 4.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 0.3% annually for the foreseeable future. So it's pretty clear that City Developments' revenues are expected to shrink faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for City Developments. Fortunately, they also upgraded their revenue estimates, although City Developments'they are still expected to trail 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for City Developments going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - City Developments has 3 warning signs (and 1 which is a bit concerning) we think 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.