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Please shout out if my too-long post doesn't make sense as I'm going to post what the analysts have published for next year and the year after. When you see them, you'll think they'ver gone lottery crazy. After which - that's it on analysts forecasts. (Promise).
PS. This bit:
"They're over awed by the interim forecasts - which are ****e - as I've shown."
Should have come out sort of like this:
"They're over awed by the interim forecasts - which are Sh- .ite. - as I've shown."
Part 2 Concludes:
. . .
Q1 Analysts forecast for Net Profit = £484.5m - But BT published achieving £505m
Q2 Analysts forecast for Net Profit = £486.0m - But BT published achieving £563m
Q3 Analysts forecast for Net Profit = £457.0m ? = Next Thursday
So for their Q2 forecast, the true Q1 £505m became their property as if they had forecast that all along, therefore their second Q2 forecast added to actual Q1, meant they were really looking for £991m. Still under estimated but not too bad as BT for H1 produced £1,068m.
So the analysts underestimated yet again, by a larger margin. Q3 forecast added to H1 actual means they are really looking for £1,525m next Thursday as a running total. Which means they only need to forecast circa no more than £500m max if that, to appear as if their forecasts have been correct all along in forecasting £2b. Do you dig? Shout out if I haven't written clearly.
It's been possible because they moved their 12 month forecast without making a song and dance about it.
In the old Q1 still available on BT's site they forecast the full year net profit of £1.988m - I disputed that on sight it's recorded deep into last year's posts of mine.
But the market swallowed it wholesale and the lacklustre SP performance continues. Who wants to buy a stock where even the analysts say the last jewel in the crown (net profit) will start failing and produce less than last year? - a first!
- the worst since this debacle commenced in 2016.
Then take a look at the full year forecast on 27th Sept 2019 - they quietly upped it to £2,009m - £2b ! Bingo! Still less than last year; but now we're cooking on gas! I've got the time of day for them now :)
So what's the latest in Q3 that they have for the full year? - £2,029.5m
- £2b+ At last fellas' but you're still well short.
I need to see an INCREASE over last year because that's what I firmly believe, you're getting there, so what have you forecast for future years?
- well I'll put the jam tomorrow net profits in a separate post - you'll like them.
I just don't get why the wider stock market isn't getting these horses mouth full year forecasts of the analysts of £2b+ net profit.
They're over awed by the interim forecasts - which are ****e - as I've shown.
Took some doing but they got there. Still short of the truth but they know if they underestimate on a nice increase by a smallish amount then they're still heroes. Promise more and BT doesn't deliver and the analyst brokers houses could lose clients.
Anyway they're looking for a £1,500m+ net profit on Thursday (£1.5b+) They'll get it! :)
Then will the market take notice? Who knows? Sentiment after 4 years has solidified. Talk up BT - anywhere and folks will have your guts for garters.
PS. £1.5b+ ? Poohee - Well if it pleases - but I'm looking for £1.6b+ :)
(Part 1 of 2)
Try and stick with this post to the end as it answers my doubts and accusations and it should yours too. Here goes:
This concludes my thoughts on the in-house brokers analysts forecasts for BT to the header-link that this refers to. Or just read on from the opening para of today's mid day post -
" Ha! Finally, finally, (LOL!) FINALLY I get it.
Floated into my subconscious early this morning whilst still in bed. Yes there is bias in the analysts forecasts - but not the corruption/fraud bias I was intimating of. But the kind of bias that is legal and self serving that we all employ to protect ourselves from error. . . "
Here's what's been building up my indignation and the target of my ire for affecting the SP
Q1 Analysts forecast for Net Profit = £484.5m
Q2 Analysts forecast for Net Profit = £486.0m
Q3 Analysts forecast for Net Profit = £457.0m
BT produced actuals of £1,068m for Q1 & Q2 (H1) - so the analysts Q2 forecast in particular, was woefully underestimated and if you look at the recent decline in the SP, they shunted down nicely in tune with the bearish quarterly forecasts [Q3 was released to the public in error for a second time on Jan 13th].
(Check what happened to the SP on that day; and the acceleration downwards since). Clearly it looks like the analysts are expecting a poor Q3 update - but are they?
Question: Why has the analysts full year forecast increased significantly since Q1 then from £1.9Bn to £2.029Bn?
Answer: Because they still expect a £2b+ net profit but a slight retracement for the third quarter whilst getting there.
I was perturbed by adding up all 3 Quarter forecasts which come to £1427.5m
So imagine if they come out with a Q4 of only similar, say £489.5m?
That would give a full year of a disastrous forecasts of £1917m - right back to their original god-awful 12 month forecast area in Q1. (But it doesn't work like that of course).
Is that why the market in BT started to slide noticeably? If so, it's mistaken thinking because the answer the analysts have built in to the system is to base their next forecast not on their previous forecasts but shift gear and forecast the next quarter based on the truth, the reality that BT produced each quarter - and hey presto they can increase the full year forecast (to what I was expecting all along) and still come up with a £2b net profit figure if that's what BT do come up with by the financial year's end.
So the answer to my question in the previous post is THEY MOVE THE GOALPOSTS and up or down their next quarterly forecast to stay in the orbit of what they believe will be the 12 month actual result whilst being way out all the time LOL! See this:
Q1 Analysts forecast for Net Profit = £484.5m - But BT published achieving £505m
Q2 Analysts forecast for Net Profit = £486.0m - But BT published achieving £563m
Q3 Analysts forecast for Net Profit = £457.0m ? = Next Thursday
(CONTINUES > > >)
Edfun,
I think a 25% cut in the dividend is what most analysts have been forecasting. I find it scary as the present share price is suggesting that the cut will be much more substantial. At 171p a dividend of 11.23p would be nearly 7%. In my limited experience that is way to high. So either the share price goes substantially up or the dividend is cut drastically. Take your choice.
I haven't checked, but the financial press have been pushing for a dividend cut for ages. My personal view is that it's not required, but the market tends to get it's way. I expect that Deutsche Telekom will be using their influence to maintain it. There's still tons of cash going cheap on the financial markets. BT could borrow on very favourable terms using long dated corporate bonds and use that to finance 5G and FTTP. I don't buy into the narrative built around the pension deficit and BT's debt, just look at the amount of debt built up in start-ups and how long it takes for many of them to turn a profit, whereas BT is already a highly profitable company.
Ha,link removed when I posted ??
It's on Bt.com website under investors/ financial reporting / consensus . Also saying EBITDA Q3 1.995 for 2019/2020 This seems high .
https://www.btplc.com/Sharesandperformance/Financialreportingandnews/Latestconsensus/index.htm
Just looking at the Latest consensus on BT website from Jan 24th and it predicts divided for year 2019/2020 = 15.10p and 2020/2021 = 11:23p
Any views on this ?
Ha! Finally (LOL!) FINALLY I get it.
Floated into my subconscious early this morning whilst still in bed. Yes there is bias in the analysts forecasts - but not the corruption/fraud bias I was intimating of. But the kind of bias that is legal and self serving that we all employ to protect ourselves from error.
Will post what that is later but will gather analysts previous early forecasts from Q1 onwards to illustrate how they can under estimate what BT will actually achieve and still leave themselves room to appear correct. And you can only ONLY discern this if you have ALL the utterances of all registered brokerage house analysts for BT. An impossible task - normally. But investors in BT have a tremendous gift handed to then by BT - on their website, where to my knowledge, BT is the first company in the world to set aside web pages to the entire recorded utterances of all registered house analysts for BT.
So the reveal on the analysts later. If interested, have a think and maybe guess at the simple answer to the conundrum that eluded me until this morning, on why the analysts forecasts can never be 'wrong' - mathematically. It's easy when you think about it. Clue: "goalposts/moving + the 9 month £1,500m forecast". If you are ace at complex puzzles you won't get the answer - because the answer is far too simple, but it helps enormously if you have access to the analysts previous forecasts courtesy of BT's website. (Back later on this subject).
==================
Postscript:
So, why are analysts forecasts important anyway?
Is it because of the SP forecasts they publish?
- Clearly not. Just look at the links above and try and find just 2 of them that agree - they're all over the place. So no, they're rubbish at guessing future SP's though occasionally by luck they will ring the bell once in a blue moon.
Is it because of the Revenues and profits forecast by them?
For accuracy then not really, although short term they can damage the SP of a stock until the full 12 months results are announced by the company.
So, why are they important?
This - f you haven't the time to ruminate and digest every forecast as they come out all year, there's only one thing you should concern yourself regarding analysts forecasts, and it's THE most important one - this > >
**Is the overall consensus on the whole, increasing over time, or decreasing?**
That ** 'advice' ** sentence is not from my personal experience but from the billionaire guru books by those who have already made it.
That's it! Are the forecasts going up, or down?
Presumably it's this year's quarter v last year's quarter as a retailer might have steadily increasing quarters as they run up to Christmas each year. Personally I prefer the company's own quarters comparisons and have never compared analysts qtly forecasts
This year with the 3 quarters of forecasts in for BT - are a mess, so nothing there.
- Back later
Thanks Healy'.
Also there were numerous further foreign business sell off's, some in latin America I think, mid year to raide cash to reduce debt, before I logged off after posting on H1.
So if loss making, that would immediately cause the increase in net profit from being absorbed by speculatrive loss making ventures abroad. It's a possible reason for net profit flowering year after future year without fail whilst all around decreases. Maybe the analysts think what happens when there's no loss making drains upon the net profit to sell off any more?
That would be a cause to ignore the gallant net profit in the future years trouncing this years and all previoius years net profit.
Concludes -
It's very telling that a mistake has been made in the Q4 folder in that link and future years are deleted all but for next year - but not in the Dec 13th Q3 folder, which shows net profit increasing at an astonishing rate for several years to come and into the future.
I can list all the future years up for you but would encourage you to mosey around the forecasts and get a feel for them, rather than rely on a poster who might make a mistake.
In other words: I smell a rat. Bias - or worse!
Terrible low forecasts easily beaten by BT - yet no reward by "the market" ie., the analysts - What the hell is going on?
I'm open to reasonable innocent explanations to myconundrum.
Hi Aus,
Yes, I think we are both on the same page but you threw me for a moment there with your first para.
By "quarter on quarter" I hope you meant quarter after quarter etc.,
Also by "not corrected themselves" sort of. They're allowed to be within say 5% or so of error in accuracy without apologising, after all no one is Nostradamus or has the power of prophecy - but they defo should be in the same ballpark as a weather forecaster, forecasting rain etc., if they can't do that they're failing in their core job.
I don't think they are failing; if this 3rd quarter goes the same way and BT destroys them, then IMO some sort bias is afoot.
Usually and you'll know this next bit, should a company BEAT the analysts forecasts the stock price gets rewarded with an upgrade in the SP. AND nothing is more important than earnings - it's the core metric to every stock market successful system by every well known guru of legend who's ever lived. Twice BT's earnings have exceeded the forecasts this current year - but nothing in the SP!
You could say yes but with continued decline year after year in revenue there's a compromise to be made plus heavy pension deficit to make up and new on the scene this year a big jump in debt. I can buy in to that. What I can't buy into is catching them out with their full 12 months net profit forecast!
I too started with a full years forecast and broke it down to even quarters. So, I'm looking for and expect BT to deliver over £2B++ and the past 2 quarters gives me every confidence BT is on course to deliver that.
Now look at the analysts quarterly forecasts. Early last year they were showing £1.9B for the full year which would be a catastrophe for BT as that would be every meaningful metric down the Shute to last year.
So if you divide that by 4 yes you're going to get sub £500m net profit forecasts. So all in accord there. But shock! Horror! Look at their full year forecast for the current year that ends in a few months time. They're showing £2.039B mean and £2.020 median so /by 2 and that's a quotable £2.0295B
Now given that as their forecast why-O-why have they produced (now 3) forecasts all well below sub £500m in the £400m's? Why would you do that to burden yourself with a Guinness book of records finish in the Q4 to deliver £2b+?
Just doesn't make sense, particularly as I checked (a year or two only) and BT is non-cyclical and produces even quarters performances. Where is the record breaking Q4 performance going to come from?
It's very telling that a mistake has been made in the Q4 folder in that link and future years are deleted - but not in the Dec 13th Q3 folder, which shows net profit increasing at an astonishing rate for several years to come. I can list all the future years up for you but would encourage you to mosey around the forecasts and get a feel for them, rather than rely on a poster who might make a mistake CONTINUES>>>
Thanks for your thoughts / input on this Velo. Its really appreciated. I believe the share price was lingering in the mid 170's after the Q2 results if my memory serves me correctly so not much progress being made here for the time being. We'd just delisted from the NYSE then and No Deal Brexit was firmly on too which was adding some negative sentiment. Only notable things I'm aware of changing since then are the sale of the Spanish business and the loss of the virgin Media contract.
Velo - I think you are saying analysts have continuously under estimated profit quarter on quarter, but have not corrected themselves when the “actual” numbers are reported.
Subsequently their figures are behind the numbers reported
Therefore BT will hit their yearly numbers of just over £2bln, whilst a view from the analysts shows they probably won’t. Unless they have an exceptional 4th quarter
Are analysts removing one off’s ?
"...For that £2B to happen they HAVE to forecast over £600m just to meet their full year forecast. Unlikely IMO..."
For full clarification that part would be improved if I'd added " in Q4" ie.,
"...For that £2B to happen they HAVE to forecast over £600m IN Q4 just to meet their full year forecast. Unlikely IMO.."
(Concludes)
Now here's the kicker and what this post has been leading up to. Guess what the consensus analysts forecast is for the full year? Only £2.0295B !
- Yet all last year and now their Q3, they've been putting out £400m and odd.
For that £2B to happen they HAVE to forecast over £600m just to meet their full year forecast. Unlikely IMO.
So, the question remains, why have they kept on underestimating for the past 2 quarters and look highly likely to do the same for Q3 whilst my early last year of looking for a £2B+ Net profit is agreed by them in their full 12 month forecast ???
One has to ask what motivation have they to continually underestimate in the face of BT continually delivering seriously higher net profits each quarter?
Is Net profit not following the bearish 'narrative' imposed (planned) upon it?
PS. I have the full year Net Profit as £2.175B which is an INCREASE on last year's Net Profit of £2.159B. Just say that comes in near enough, how will the market spin that? Bearishly based on current experience.
PPS. For the next 2 years even those under-estimating analysts are showing Y-O-Y INCREASES in Net Profit. What's going on? Why aren't the media analysts picking up on that as a side bar mention?
I'll start with the how I really want to end (About Net Profit forecasts)..
In house broker's analysts latest consensus is for Q3 Net Profit is to come in with a paltry £457m (That's the mean and the median added and divided by 2 to get a single figure (an average of the averages if you like :)
It's all on BT's site right now, right here, the very latest Q3 forecast (Ignore Q4 it's a Q3 double post by them) -
https://www.btplc.com/Sharesandperformance/Financialreportingandnews/Latestconsensus/Modules/Archive/Q32019-20/BTGroupconsensus131219.pdf
----------------------------------------
(Part 1 of 2) I'm looking towards almost triple figures higher than theirs at circa £553m in NET PROFIT.
This current quest I'm on, goes way back to before Q1 and that infamous £1 forecast by a media analyst after the consensus forecast was released and subsequently drove the SP down to intraday at 157/158 closing at 160p area last year.
I had much different expectations but was uneasy as FCFlow had taken a hit so long termers may recall me requesting analysts links on anything FCF mentioned on BT and one from the US site Alpha made it all clear. But since those days BT's FCF is once again magnificent so all media analysts forecasts based on the low net profit forecasts AND a ruined FCF are now null and void. So all that remains is the wilfully, obviously under estimated net profit forecasts.
Recap:
Q1 Net profit forecast by Consensus analysts (21 of them) was for £445m
They were well under as BT reported £505m
Q2 Net profit forecast by Consensus analysts (21 of them) was £486m
Again analysts were seriously underestimating as BT reported £563m !!!
H1 reported by BT was those 2 actuals of £1.068B
Which meant I felt back on track for £2B+plus in Net Profit, as analysts consensus was at that time showing as £1.9b odd.
Now after 2 serious misses by the analysts which fed through to the media with consequences for the SP don't you think they would now have a better handle on net profit expectations and offer a more realistic forecast for next Thursdays Q3 results? Well, let's see:
Analysts consensus forecast for Q3 is, yet another lousy "4" starting figure of £457m. (BT is not cyclical; there are no seasons, quarters are much of a muchness over the years).
So you have actual audited H1 NET PROFIT in the bag of £1.068B
Now add on the analysts forecast to get the 9 month figure (as that is what BT will report) and they are saying for 9 months expect £1.427.5B next Thursday.
Here's mine - H1 + Q3 of £553M = 9 months Net Profit to come in circa £1.621B
(For reference, Last year's 9 months Net Profit was £1.646B )
Now here's the kicker and what this post has been leading up to. Guess what the consensus analysts forecast is for the full year? Only £2.0295B !
- Yet all last year and now their Q3, they've been putting out £400m and odd.
For that £2B to happen they HAVE to forecast over £600m just to meet their full