As you might know, Airtel Africa Plc (LON:AAF) recently reported its second-quarter numbers. Results were mixed, with revenues of US$970m exceeding expectations, even as earnings per share (EPS) came up short. Statutory earnings were US$0.019 per share, -5.0% below whatthe analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, Airtel Africa's seven analysts are forecasting 2021 revenues to be US$3.57b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$0.07, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$3.59b and earnings per share (EPS) of US$0.072 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$0.88, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Airtel Africa at US$0.89 per share, while the most bearish prices it at US$0.57. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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 sales are expected to reverse, with the forecast 1.0% revenue decline a notable change from historical growth of 12% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.4% next year. It's pretty clear that Airtel Africa's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Airtel Africa. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Airtel Africa's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$0.88, 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 Airtel Africa. Long-term earnings power is much more important than next year's profits. We have forecasts for Airtel Africa going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with Airtel Africa .
This article by Simply Wall St is general in nature. 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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