Last week, you might have seen that MTR Corporation Limited (HKG:66) released its yearly result to the market. The early response was not positive, with shares down 2.7% to HK$42.65 in the past week. It looks like a credible result overall - although revenues of HK$55b were in line with what analysts predicted, MTR surprised by delivering a statutory profit of HK$1.94 per share, a notable 15% above expectations. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for MTR
Following the recent earnings report, the consensus fromeight analysts covering MTR expects revenues of HK$52.0b in 2020, implying a measurable 4.5% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 25% to HK$1.45 in the same period. Before this earnings report, analysts had been forecasting revenues of HK$55.6b and earnings per share (EPS) of HK$1.79 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a substantial drop in earnings per share forecasts.
It'll come as no surprise then, to learn that analysts have cut their price target 6.0% to HK$47.50. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values MTR at HK$52.00 per share, while the most bearish prices it at HK$41.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to MTR'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 4.5% revenue decline a notable change from historical growth of 7.5% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 3.4% next year. It's pretty clear that MTR's revenues are expected to perform substantially worse than the wider market.