Frasers Property Limited Just Missed EPS By 70%: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that Frasers Property Limited (SGX:TQ5) filed its yearly result this time last week. The early response was not positive, with shares down 3.9% to S$1.22 in the past week. Sales came in at S$3.6b, beating expectations by a remarkable 23%, while statutory earnings per share (EPS) were S$0.038, missing estimates by an equally remarkable 70%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Frasers Property

Taking into account the latest results, the four analysts covering Frasers Property provided consensus estimates of S$3.07b revenue in 2021, which would reflect a chunky 15% decline on its sales over the past 12 months. Statutory earnings per share are predicted to bounce 157% to S$0.098. Yet prior to the latest earnings, the analysts had been anticipated revenues of S$3.07b and earnings per share (EPS) of S$0.13 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at S$1.48, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Frasers Property analyst has a price target of S$1.70 per share, while the most pessimistic values it at S$1.25. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Frasers Property's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 15% revenue decline a notable change from historical growth of 3.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% next year. It's pretty clear that Frasers Property's revenues are expected to perform substantially worse 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 Frasers Property. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at S$1.48, 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 Frasers Property going out to 2023, 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 Frasers Property (1 is a bit concerning) you should be aware of.

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