The quarterly results for Galaxy Entertainment Group Limited (HKG:27) were released last week, making it a good time to revisit its performance. It was a weak result overall, with Galaxy Entertainment Group reporting HK$8.6b in revenues, which was 21% less than what the analysts had expected. 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.

Taking into account the latest results, the most recent consensus for Galaxy Entertainment Group from 15 analysts is for revenues of HK$44.5b in 2024. If met, it would imply a credible 7.5% increase on its revenue over the past 12 months. Per-share earnings are expected to grow 16% to HK$2.20. Yet prior to the latest earnings, the analysts had been anticipated revenues of HK$44.4b and earnings per share (EPS) of HK$2.28 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at HK$49.15, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Galaxy Entertainment Group at HK$64.00 per share, while the most bearish prices it at HK$33.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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 stands out from these estimates, which is that Galaxy Entertainment Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 15% annualised growth until the end of 2024. If achieved, this would be a much better result than the 11% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 12% per year. Not only are Galaxy Entertainment Group's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Galaxy Entertainment Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Galaxy Entertainment Group analysts - going out to 2026, 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.

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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.