As you might know, Viva Leisure Limited (ASX:VVA) recently reported its yearly numbers. Sales hit AU$91m in line with forecasts, although the company reported a statutory loss per share of AU$0.14 that was somewhat smaller than the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the twin analysts covering Viva Leisure are now predicting revenues of AU$136.5m in 2023. If met, this would reflect a substantial 50% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Viva Leisure forecast to report a statutory profit of AU$0.01 per share. In the lead-up to this report, the analysts had been modelling revenues of AU$136.1m and earnings per share (EPS) of AU$0.028 in 2023. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target fell 9.9% to AU$2.43, with the analysts clearly linking lower forecast earnings to the performance of the stock price.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Viva Leisure's growth to accelerate, with the forecast 50% annualised growth to the end of 2023 ranking favourably alongside historical growth of 41% 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 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Viva Leisure 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 numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Viva Leisure's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Viva Leisure. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Viva Leisure going out as far as 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Viva Leisure you should know about.
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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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