Yahoo Finance Compass Group PLC Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
Compass Group PLC (LON:CPG) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Statutory earnings per share fell badly short of expectations, coming in at UK£0.08, some 42% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at UK£20b. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Compass Group
Following last week's earnings report, Compass Group's 20 analysts are forecasting 2021 revenues to be UK£20.0b, approximately in line with the last 12 months. Per-share earnings are expected to bounce 256% to UK£0.29. In the lead-up to this report, the analysts had been modelling revenues of UK£20.0b and earnings per share (EPS) of UK£0.28 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of UK£13.57, suggesting that the company has met expectations in its recent result. 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. Currently, the most bullish analyst values Compass Group at UK£18.00 per share, while the most bearish prices it at UK£7.11. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Compass Group's revenue growth will slow down substantially, with revenues next year expected to grow 0.3%, compared to a historical growth rate of 5.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Compass Group.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Compass Group's revenues 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Compass Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Compass Group analysts - going out to 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 5 warning signs for Compass Group you should know about.
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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