It's been a good week for Vodafone Group Plc (LON:VOD) shareholders, because the company has just released its latest full-year results, and the shares gained 2.3% to UK£1.37. It looks like the results were pretty good overall. While revenues of €45b were in line with analyst predictions, statutory losses were much smaller than expected, with Vodafone Group losing €0.031 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the recent earnings report, the consensus from 18 analysts covering Vodafone Group is for revenues of €43.9b in 2021, implying a measurable 2.3% decline in sales compared to the last 12 months. Earnings are expected to improve, with Vodafone Group forecast to report a statutory profit of €0.075 per share. Before this earnings report, the analysts had been forecasting revenues of €43.9b and earnings per share (EPS) of €0.077 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at €1.92, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Vodafone Group at €2.19 per share, while the most bearish prices it at €0.68. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. One thing that stands out from these estimates is that shrinking revenues are expected to moderate from the historical decline of 4.3% per annum over the past five years.
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 revenues will perform worse than the wider industry. The consensus price target held steady at €1.92, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Vodafone Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Vodafone Group going out to 2025, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Vodafone Group (1 can't be ignored!) that we have uncovered.
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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. 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. Thank you for reading.
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