Yahoo Finance Duxton Water Limited Just Missed Revenue By 7.0%: Here's What Analysts Think Will Happen Next
It's been a mediocre week for Duxton Water Limited (ASX:D2O) shareholders, with the stock dropping 11% to AU$1.41 in the week since its latest annual results. Results look mixed - while revenue fell marginally short of analyst estimates at AU$96m, statutory earnings were in line with expectations, at AU$0.064 per share. 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
View our latest analysis for Duxton Water
After the latest results, the consensus from Duxton Water's only analyst is for revenues of AU$48.0m in 2020, which would reflect a concerning 50% decline in sales compared to the last year of performance. Statutory per share are forecast to be AU$0.064, approximately in line with the last 12 months. Before this earnings report, analysts had been forecasting revenues of AU$39.7m and earnings per share (EPS) of AU$0.058 in 2020. There has definitely been an improvement in perception after these results, with analysts noticeably increasing both their earnings and revenue estimates.
Despite these upgrades, analysts have not made any major changes to their price target of AU$1.55, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.
In addition, we can look to Duxton Water's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that sales are expected to reverse, with the forecast 50% revenue decline a notable change from historical growth of 95% over the last three years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 8.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Duxton Water to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Duxton Water's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider market. The consensus price target held steady at AU$1.55, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Duxton Water. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
You can also view our analysis of Duxton Water's balance sheet, and whether we think Duxton Water is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
