Café de Coral Holdings Limited Beat Analyst Estimates: See What The Consensus Is Forecasting For Next Year

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As you might know, Café de Coral Holdings Limited (HKG:341) just kicked off its latest half-yearly results with some very strong numbers. Café de Coral Holdings beat earnings, with revenues hitting HK$4.3b, ahead of expectations, and earnings per share outperforming analyst reckonings by a solid 14%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.

View our latest analysis for Café de Coral Holdings

SEHK:341 Past and Future Earnings, December 1st 2019
SEHK:341 Past and Future Earnings, December 1st 2019

Following last week's earnings report, Café de Coral Holdings's six analysts are forecasting 2020 revenues to be HK$8.61b, approximately in line with the last 12 months. Earnings per share are forecast to fall 20% to HK$0.71 in the same period. In the lead-up to this report, analysts had been modelling revenues of HK$8.85b and earnings per share (EPS) of HK$0.98 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

The consensus price target fell 7.6% to HK$23.01, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 Café de Coral Holdings, with the most bullish analyst valuing it at HK$29.10 and the most bearish at HK$18.26 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Further, we can compare these estimates to past performance, and see how Café de Coral Holdings forecasts compare to the wider market's forecast performance. We would highlight that Café de Coral Holdings's revenue growth is expected to slow, with forecast 0.6% increase next year well below the historical 4.0%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 12% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Café de Coral Holdings.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Café de Coral Holdings's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Café de Coral Holdings going out to 2024, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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