Yahoo Finance Tabcorp Holdings Limited (ASX:TAH) Just Reported Earnings, And Analysts Cut Their Target Price
Last week, you might have seen that Tabcorp Holdings Limited (ASX:TAH) released its half-year result to the market. The early response was not positive, with shares down 6.7% to AU$0.69 in the past week. Results were roughly in line with estimates, with revenues of AU$1.2b and statutory earnings per share of AU$0.029. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Tabcorp Holdings
Taking into account the latest results, the current consensus, from the ten analysts covering Tabcorp Holdings, is for revenues of AU$2.32b in 2024. This implies a noticeable 2.7% reduction in Tabcorp Holdings' revenue over the past 12 months. Earnings are expected to improve, with Tabcorp Holdings forecast to report a statutory profit of AU$0.043 per share. In the lead-up to this report, the analysts had been modelling revenues of AU$2.38b and earnings per share (EPS) of AU$0.028 in 2024. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the considerable lift to to the earnings per share numbers.
The analysts have cut their price target 16% to AU$0.88per share, suggesting that the declining revenue was a more crucial indicator than the expected improvement in earnings. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Tabcorp Holdings, with the most bullish analyst valuing it at AU$1.05 and the most bearish at AU$0.70 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 Tabcorp Holdings shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2024 compared to the historical decline of 23% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.8% annually. So while a broad number of companies are forecast to grow, unfortunately Tabcorp Holdings is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tabcorp Holdings' earnings potential next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Tabcorp Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Tabcorp Holdings analysts - going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Tabcorp Holdings 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.
