It's shaping up to be a tough period for Wharf Real Estate Investment Company Limited (HKG:1997), which a week ago released some disappointing annual results that could have a notable impact on how the market views the stock. Wharf Real Estate Investment missed earnings this time around, with HK$13b revenue coming in 2.1% below what the analysts had modelled. Statutory earnings per share (EPS) of HK$1.57 also fell short of expectations by 19%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Wharf Real Estate Investment after the latest results.
After the latest results, the 15 analysts covering Wharf Real Estate Investment are now predicting revenues of HK$13.8b in 2024. If met, this would reflect an okay 4.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 44% to HK$2.27. Yet prior to the latest earnings, the analysts had been anticipated revenues of HK$14.2b and earnings per share (EPS) of HK$2.33 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
The analysts made no major changes to their price target of HK$34.59, suggesting the downgrades are not expected to have a long-term impact on Wharf Real Estate Investment's 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. The most optimistic Wharf Real Estate Investment analyst has a price target of HK$48.60 per share, while the most pessimistic values it at HK$28.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Wharf Real Estate Investment shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Wharf Real Estate Investment's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.7% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 5.3% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 6.7% annually for the foreseeable future. So although Wharf Real Estate Investment's revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Wharf Real Estate Investment. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Wharf Real Estate Investment going out to 2026, and you can see them free on our platform here..
Plus, you should also learn about the 2 warning signs we've spotted with Wharf Real Estate Investment .
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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.
