Yahoo Finance Softcat plc Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
It's been a good week for Softcat plc (LON:SCT) shareholders, because the company has just released its latest half-year results, and the shares gained 6.1% to UK£15.88. Results look mixed - while revenue fell marginally short of analyst estimates at UK£467m, statutory earnings beat expectations 5.9%, with Softcat reporting profits of UK£0.26 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Softcat
Taking into account the latest results, the current consensus from Softcat's 13 analysts is for revenues of UK£987.2m in 2024. This would reflect a modest 5.0% increase on its revenue over the past 12 months. Statutory per share are forecast to be UK£0.58, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of UK£1.03b and earnings per share (EPS) of UK£0.58 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The average price target was steady at UK£16.02even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Softcat analyst has a price target of UK£18.00 per share, while the most pessimistic values it at UK£12.50. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Softcat's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 10% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 0.7% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.5% per year. Not only are Softcat's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
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. They also downgraded Softcat's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. 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 estimates - from multiple Softcat analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for Softcat that we have uncovered.
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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.
