Formula One Group (NASDAQ:FWON.K) just released its latest second-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 8.0% to hit US$744m. Formula One Group also reported a statutory profit of US$0.35, which was an impressive 656% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Formula One Group after the latest results.
After the latest results, the eleven analysts covering Formula One Group are now predicting revenues of US$2.61b in 2022. If met, this would reflect a satisfactory 2.1% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Formula One Group forecast to report a statutory profit 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 satisfactory to revenue, the consensus also made a minor downgrade to its earnings per share forecasts.
There's been no major changes to the price target of US$67.44, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Formula One Group, with the most bullish analyst valuing it at US$77.00 and the most bearish at US$37.00 per share. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. 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 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 upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Formula One Group 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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