Grab Holdings Limited (NASDAQ:GRAB) just released its latest quarterly results and things are looking bullish. It looks like a positive result overall, with revenues of US$615m beating forecasts by 3.9%. Statutory losses of US$0.02 per share were 3.9% smaller than the analysts expected, likely helped along by the higher revenues. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Grab Holdings' 22 analysts are now forecasting revenues of US$2.81b in 2024. This would be a major 27% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 79% to US$0.046. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$2.82b and losses of US$0.06 per share in 2024. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a very favorable reduction to losses per share in particular.
The average price target held steady at US$4.70, seeming to indicate that business is performing in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Grab Holdings, with the most bullish analyst valuing it at US$7.00 and the most bearish at US$3.10 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Grab Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 21% growth on an annualised basis. This is compared to a historical growth rate of 54% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.3% per year. So it's pretty clear that, while Grab Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. 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 Grab Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for Grab Holdings going out to 2025, 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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