It's been a mediocre week for Acrow Formwork and Construction Services Limited (ASX:ACF) shareholders, with the stock dropping 12% to AU$0.30 in the week since its latest interim results. Revenues were AU$38m, with Acrow Formwork and Construction Services reporting some -6.8% below analyst expectations. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Acrow Formwork and Construction Services from dual analysts is for revenues of AU$90.4m in 2020, which is a major 26% increase on its sales over the past 12 months. Statutory earnings per share are expected to jump 324% to AU$0.047. Before this earnings report, analysts had been forecasting revenues of AU$95.1m and earnings per share (EPS) of AU$0.043 in 2020. So it's pretty clear that while sentiment around revenues has declined following the latest results, analysts are now more bullish on the company's earnings power.
The consensus has made no major changes to the price target of AU$0.35, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Acrow Formwork and Construction Services's performance in recent years. We would highlight that Acrow Formwork and Construction Services's revenue growth is expected to slow, with forecast 26% increase next year well below the historical 72%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.8% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkAcrow Formwork and Construction Services will grow faster than the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Acrow Formwork and Construction Services following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at AU$0.35, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
It might also be worth considering whether Acrow Formwork and Construction Services's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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