Yahoo Finance carsales.com Ltd Recorded A 5.3% Miss On Revenue: Analysts Are Revisiting Their Models
It's been a good week for carsales.com Ltd (ASX:CAR) shareholders, because the company has just released its latest interim results, and the shares gained 2.2% to AU$21.84. Results look mixed - while revenue fell marginally short of analyst estimates at AU$199m, statutory earnings beat expectations 2.1%, with carsales.com reporting profits of AU$0.25 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for carsales.com
Taking into account the latest results, the current consensus from carsales.com's 15 analysts is for revenues of AU$432.2m in 2021, which would reflect a decent 13% increase on its sales over the past 12 months. Per-share earnings are expected to expand 17% to AU$0.57. Before this earnings report, the analysts had been forecasting revenues of AU$439.6m and earnings per share (EPS) of AU$0.57 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 6.7% to AU$21.51despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of carsales.com's earnings by assigning a price premium. 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 carsales.com at AU$25.89 per share, while the most bearish prices it at AU$17.40. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that carsales.com's rate of growth is expected to accelerate meaningfully, with the forecast 13% revenue growth noticeably faster than its historical growth of 3.5%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 13% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that carsales.com is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on carsales.com. Long-term earnings power is much more important than next year's profits. We have forecasts for carsales.com going out to 2025, 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 carsales.com that you need to be mindful of.
This article by Simply Wall St is general in nature. 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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