Yahoo Finance Earnings Miss: Universal Music Group N.V. Missed EPS By 32% And Analysts Are Revising Their Forecasts
Last week saw the newest full-year earnings release from Universal Music Group N.V. (AMS:UMG), an important milestone in the company's journey to build a stronger business. It looks like a pretty bad result, all things considered. Although revenues of €10b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 32% to hit €0.43 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Universal Music Group after the latest results.
Check out our latest analysis for Universal Music Group
After the latest results, the 18 analysts covering Universal Music Group are now predicting revenues of €11.0b in 2023. If met, this would reflect a reasonable 6.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 52% to €0.65. Before this earnings report, the analysts had been forecasting revenues of €11.0b and earnings per share (EPS) of €0.79 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
The consensus price target held steady at €25.95, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Universal Music Group, with the most bullish analyst valuing it at €36.00 and the most bearish at €11.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Universal Music Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Universal Music Group's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 6.1% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.8% annually. So it's pretty clear that, while Universal Music Group's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Universal Music Group. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at €25.95, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Universal Music Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Universal Music Group going out to 2025, and you can see them free on our platform here..
You still need to take note of risks, for example - Universal Music Group has 2 warning signs (and 1 which is potentially serious) we think you should know about.
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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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