Yahoo Finance Travis Perkins plc Just Missed Earnings - But Analysts Have Updated Their Models
Travis Perkins plc (LON:TPK) shareholders are probably feeling a little disappointed, since its shares fell 4.5% to UK£7.03 in the week after its latest yearly results. Statutory earnings per share fell badly short of expectations, coming in at UK£0.18, some 57% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at UK£4.9b. 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.
View our latest analysis for Travis Perkins
Taking into account the latest results, Travis Perkins' 16 analysts currently expect revenues in 2024 to be UK£4.78b, approximately in line with the last 12 months. Per-share earnings are expected to shoot up 104% to UK£0.37. Before this earnings report, the analysts had been forecasting revenues of UK£4.83b and earnings per share (EPS) of UK£0.48 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at UK£8.14, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Travis Perkins analyst has a price target of UK£9.50 per share, while the most pessimistic values it at UK£6.10. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would also point out that the forecast 1.6% annualised revenue decline to the end of 2024 is better than the historical trend, which saw revenues shrink 9.1% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 2.2% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Travis Perkins to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Travis Perkins going out to 2026, and you can see them free on our platform here..
You still need to take note of risks, for example - Travis Perkins has 3 warning signs we think you should be aware of.
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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.
