It's been a good week for Swire Pacific Limited (HKG:19) shareholders, because the company has just released its latest half-yearly results, and the shares gained 4.5% to HK$69.40. It was a credible result overall, with revenues of HK$40b and statutory earnings per share of HK$2.74 both in line with analyst estimates, showing that Swire Pacific is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, the current consensus, from the seven analysts covering Swire Pacific, is for revenues of HK$78.3b in 2024. This implies a discernible 5.5% reduction in Swire Pacific's revenue over the past 12 months. Statutory earnings per share are forecast to crater 71% to HK$5.85 in the same period. In the lead-up to this report, the analysts had been modelling revenues of HK$83.4b and earnings per share (EPS) of HK$6.43 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

The analysts made no major changes to their price target of HK$74.46, suggesting the downgrades are not expected to have a long-term impact on Swire Pacific's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Swire Pacific at HK$82.00 per share, while the most bearish prices it at HK$65.00. This is a very narrow spread of estimates, implying either that Swire Pacific is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 11% annualised decline to the end of 2024. That is a notable change from historical growth of 2.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Swire Pacific is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Swire Pacific. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at HK$74.46, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Swire Pacific going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Swire Pacific (1 is potentially serious!) that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.