Yahoo Finance AGF Management Limited Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
AGF Management Limited (TSE:AGF.B) shareholders are probably feeling a little disappointed, since its shares fell 6.7% to CA$7.26 in the week after its latest annual results. The result was positive overall - although revenues of CA$462m were in line with what the analysts predicted, AGF Management surprised by delivering a statutory profit of CA$0.55 per share, modestly greater than 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for AGF Management
Taking into account the latest results, the most recent consensus for AGF Management from six analysts is for revenues of CA$478.7m in 2022 which, if met, would be a reasonable 3.7% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 51% to CA$0.85. In the lead-up to this report, the analysts had been modelling revenues of CA$485.0m and earnings per share (EPS) of CA$0.89 in 2022. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at CA$8.88, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values AGF Management at CA$10.75 per share, while the most bearish prices it at CA$7.50. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AGF Management's past performance and to peers in the same industry. It's clear from the latest estimates that AGF Management's rate of growth is expected to accelerate meaningfully, with the forecast 3.7% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 0.4% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 33% per year. It seems obvious that as part of the brighter growth outlook, AGF Management is expected 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. Fortunately, they also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations. Their estimates also suggest that AGF Management's revenues are expected to perform better than the wider industry. The consensus price target held steady at CA$8.88, 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 AGF Management. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple AGF Management analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - AGF Management has 1 warning sign we think you should be aware of.
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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.
