Earnings Beat: CapitaLand Investment Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

A week ago, CapitaLand Investment Limited (SGX:9CI) came out with a strong set of yearly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 6.4% to hit S$2.3b. CapitaLand Investment also reported a statutory profit of S$0.38, which was an impressive 84% above what the analysts had forecast. 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.

Check out our latest analysis for CapitaLand Investment

Taking into account the latest results, the current consensus from CapitaLand Investment's twelve analysts is for revenues of S$2.38b in 2022, which would reflect a satisfactory 4.0% increase on its sales over the past 12 months. Statutory earnings per share are predicted to ascend 12% to S$0.29. Yet prior to the latest earnings, the analysts had been anticipated revenues of S$2.39b and earnings per share (EPS) of S$0.24 in 2022. Although the revenue estimates have not really changed, we can see there's been a very substantial lift in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of S$4.15, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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. Currently, the most bullish analyst values CapitaLand Investment at S$4.44 per share, while the most bearish prices it at S$3.75. This is a very narrow spread of estimates, implying either that CapitaLand Investment is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 pretty clear that there is an expectation that CapitaLand Investment's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 4.0% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.8% per year. So it's pretty clear that, while CapitaLand Investment's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards CapitaLand Investment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at S$4.15, with the latest estimates not enough to have an impact on their price targets.

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 CapitaLand Investment going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 3 warning signs for CapitaLand Investment (1 is a bit unpleasant!) that we have uncovered.

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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.