shareholders may have noticed Nine Entertainment Holdings Limited (ASX Code: NEC) filed its interim results this time last week. Early reaction was not positive, with the share price down 3.3 per cent to $2.03 over the past week. 1.4b Revenue in AUD was in line with expectations, although statutory earnings per share (EPS) missed expectations by AUD 0.11, missing expectations by 6.0%. Analysts typically update their forecasts with each earnings report, and we can tell from their estimates whether their views on the company have changed, or if there are any new issues to be aware of. We gathered the latest statutory forecasts to see if analysts have changed their earnings models based on these results.
View our latest analysis for Nine Entertainment Holdings
Following its earnings report last week, twelve analysts at Nine Entertainment Holdings forecast revenue of AU$2.74b in 2023, roughly in line with the past 12 months. Statutory earnings per share are expected to rise 2.8 per cent to A$0.17. Prior to this earnings report, analysts had been forecasting 2023 revenue of A$2.78 and earnings per share (EPS) of A$0.19. Analysts appear to have turned more negative on the business after the latest results, given the small downgrade to their EPS numbers for next year.
It might come as a surprise to learn that the consensus target price remains largely unchanged at A$2.60, as analysts have clearly hinted that lower expected earnings are not expected to have much of an impact on valuations. It may also be instructive to look at the range of analyst estimates and assess how far outliers differ from the mean. There are some mixed views on Nine Entertainment Holdings, with the most bullish analyst valuing it at A$3.21 per share and the most bearish at A$1.84 per share. That suggests there is still some variance in estimates, but analysts don’t seem to be splitting the stock completely, as if it could be a make-or-break situation.
One of the ways we can understand these forecasts in light of the big picture now is to see how they measure up to past performance and industry growth estimate. These estimates imply that sales are expected to slow, with revenue expected to decline 2.3% on an annualized basis by the end of 2023. This represents a significant decline from the 14% annual growth rate over the past five years. In comparison, our data indicates that other companies in the same industry (with analyst coverage) are expected to grow revenues by 2.8% annually for the foreseeable future. It is clear that Nine Entertainment Holdings’ revenue is expected to be significantly lower than that of the industry as a whole.
the bottom line
The biggest concern is that analysts have cut their earnings per share estimates, suggesting that Nine may face business headwinds. Fortunately, analysts have also reconfirmed their revenue forecasts, showing that sales are in line – although our data does suggest that Nine Entertainment Holdings’ revenues are expected to be lower than the industry as a whole. The consensus price target has not really changed, suggesting that the intrinsic value of the business has not changed significantly based on the latest estimates.
Having said that, the long-term trajectory of a company’s earnings is much more important than next year.We have estimates from multiple analysts at nine major entertainment holding companies – by 2025, you can Check them out for free on our platform.
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This article by Simply Wall St is general in nature. We use only an unbiased methodology to provide reviews based on historical data and analyst forecasts, 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 into account your objectives or your financial situation. Our goal is to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no positions in any of the stocks mentioned.