Formula One Group (NASDAQ:FWON.K) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of US$744m, some 8.0% above estimates, and statutory earnings per share (EPS) coming in at US$0.35, 656% ahead of 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Formula One Group's eleven analysts are now forecasting revenues of US$2.61b in 2022. This would be a modest 2.1% improvement in sales compared to the last 12 months. Formula One Group is also expected to turn profitable, with statutory earnings of US$0.18 per share. In the lead-up to this report, the analysts had been modelling revenues of US$2.54b and earnings per share (EPS) of US$0.20 in 2022. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a modest to revenue, the consensus also made a small dip in its earnings per share forecasts.
The consensus price target was unchanged at US$67.44, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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. The most optimistic Formula One Group analyst has a price target of US$77.00 per share, while the most pessimistic values it at US$37.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Formula One Group's revenue growth is expected to slow, with the forecast 4.2% annualised growth rate until the end of 2022 being well below the historical 6.5% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it seems obvious that Formula One Group is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Formula One Group. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Formula One Group analysts - going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Formula One Group's balance sheet, and whether we think Formula One Group is carrying too much debt, for free 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.
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