Earnings Update: Barloworld Limited (JSE:BAW) Just Reported Its Full-Year Results And Analysts Are Updating Their Forecasts

Shareholders might have noticed that Barloworld Limited (JSE:BAW) filed its annual result this time last week. The early response was not positive, with shares down 4.3% to R76.11 in the past week. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 8.3%to hit R45b. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Barloworld

After the latest results, the consensus from Barloworld's six analysts is for revenues of R42.3b in 2023, which would reflect a small 6.1% decline in revenue compared to the last year of performance. Statutory earnings per share are forecast to dip 7.5% to R9.65 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of R41.5b and earnings per share (EPS) of R10.70 in 2023. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

The consensus price target held steady at R94.80, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Barloworld, with the most bullish analyst valuing it at R108 and the most bearish at R72.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Barloworld shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. Over the past five years, revenues have declined around 11% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 100% decline in revenue until the end of 2023. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.0% per year. So while a broad number of companies are forecast to grow, unfortunately Barloworld is expected to see its revenue affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Barloworld's revenue is expected to perform worse than 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Barloworld going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Barloworld (1 is significant!) that you need to be mindful of.

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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.