Last week saw the newest full-year earnings release from MTR Corporation Limited (HKG:66), an important milestone in the company's journey to build a stronger business. It looks like the results were a bit of a negative overall. While revenues of HK$57b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.4% to hit HK$1.25 per share. 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.
Taking into account the latest results, the most recent consensus for MTR from eleven analysts is for revenues of HK$60.0b in 2024. If met, it would imply a credible 5.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 80% to HK$2.25. Before this earnings report, the analysts had been forecasting revenues of HK$60.2b and earnings per share (EPS) of HK$2.25 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of HK$30.31, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values MTR at HK$38.50 per share, while the most bearish prices it at HK$21.40. 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.
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. For example, we noticed that MTR's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 5.3% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 0.8% 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 5.6% annually. So it looks like MTR is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at HK$30.31, 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 MTR. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for MTR going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for MTR you should be aware of, and 1 of them makes us a bit uncomfortable.
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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.