It's been a sad week for The Carlyle Group Inc. (NASDAQ:CG), who've watched their investment drop 12% to US$26.70 in the week since the company reported its quarterly result. Revenues came in 5.5% below expectations, at US$754m. Statutory earnings per share were relatively better off, with a per-share profit of US$3.35 being roughly in line with analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the consensus from Carlyle Group's eleven analysts is for revenues of US$3.42b in 2023, which would reflect a discernible 7.8% decline in sales compared to the last year of performance. Statutory earnings per share are predicted to surge 81% to US$3.76. Before this earnings report, the analysts had been forecasting revenues of US$3.87b and earnings per share (EPS) of US$4.18 in 2023. Indeed, we can see that the analysts are a lot more bearish about Carlyle Group's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
The consensus price target fell 6.2% to US$38.63, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Carlyle Group at US$55.00 per share, while the most bearish prices it at US$28.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 10% by the end of 2023. This indicates a significant reduction from annual growth of 20% 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 8.6% per year. It's pretty clear that Carlyle Group'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 Carlyle Group. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Carlyle Group's future valuation.
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 Carlyle Group analysts - going out to 2025, and you can see them free on our platform here.
Plus, you should also learn about the 4 warning signs we've spotted with Carlyle Group (including 1 which is a bit unpleasant) .
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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.
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