Last week saw the newest half-yearly earnings release from Propel Funeral Partners Limited (ASX:PFP), an important milestone in the company’s journey to build a stronger business. Results were roughly in line with estimates, with revenues of AU$103m and statutory earnings per share of AU$0.16. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Propel Funeral Partners
Taking into account the latest results, the current consensus from Propel Funeral Partners’ six analysts is for revenues of AU$213.8m in 2024. This would reflect a notable 14% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 32% to AU$0.17. In the lead-up to this report, the analysts had been modelling revenues of AU$213.3m and earnings per share (EPS) of AU$0.18 in 2024. 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 small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at AU$5.86, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Propel Funeral Partners analyst has a price target of AU$6.30 per share, while the most pessimistic values it at AU$5.35. This is a very narrow spread of estimates, implying either that Propel Funeral Partners is an easy company to value, or – more likely – the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It’s clear from the latest estimates that Propel Funeral Partners’ rate of growth is expected to accelerate meaningfully, with the forecast 30% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 15% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.8% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Propel Funeral Partners 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 that it’s tracking in line with expectations. Additionally, our data suggests that revenue is 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Propel Funeral Partners going out to 2026, and you can see them free on our platform here..
You still need to take note of risks, for example – Propel Funeral Partners has 2 warning signs (and 1 which makes us a bit uncomfortable) we think 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.
