Yahoo Finance Earnings Miss: Loblaw Companies Limited Missed EPS By 39% And Analysts Are Revising Their Forecasts
As you might know, Loblaw Companies Limited (TSE:L) recently reported its third-quarter numbers. It looks like a pretty bad result, all things considered. Although revenues of CA$15b were in line with analyst predictions, earnings fell badly short, missing estimates by 39% to hit CA$1.87 per share. Following the result, 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 forecasts to see what analysts are expecting for next year.
View our latest analysis for Loblaw Companies
Following the latest results, Loblaw Companies's eight analysts are now forecasting revenues of CA$49.7b in 2020. This would be a modest 4.6% improvement in sales compared to the last 12 months. Earnings per share are expected to leap 22% to CA$3.04. Yet prior to the latest earnings, analysts had been forecasting revenues of CA$49.7b and earnings per share (EPS) of CA$3.07 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of CA$76.00, suggesting that the company has met expectations in its recent result. 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 Loblaw Companies analyst has a price target of CA$85.00 per share, while the most pessimistic values it at CA$60.00. 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.
In addition, we can look to Loblaw Companies's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Analysts are definitely expecting Loblaw Companies's growth to accelerate, with the forecast 4.6% growth ranking favourably alongside historical growth of 1.9% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Loblaw Companies is expected to grow much faster than its market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at CA$76.00, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Loblaw Companies analysts - going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Loblaw Companies's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
