Analyst Estimates: Here's What Brokers Think Of IWG plc (LON:IWG) After Its Annual Report
The analysts might have been a bit too bullish on IWG plc (LON:IWG), given that the company fell short of expectations when it released its full-year results last week. It was a pretty negative result overall, with revenues of UK£3.0b missing analyst predictions by 4.1%. Worse, the business reported a statutory loss of UK£0.21 per share, much larger than the analysts had forecast prior to the result. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 IWG
Taking into account the latest results, the consensus forecast from IWG's five analysts is for revenues of UK£3.19b in 2024. This reflects an okay 7.9% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with IWG forecast to report a statutory profit of UK£0.015 per share. In the lead-up to this report, the analysts had been modelling revenues of UK£3.27b and earnings per share (EPS) of UK£0.0096 in 2024. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the sizeable expansion in to the earnings per share numbers.
There's been no real change to the average price target of UK£2.22, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values IWG at UK£2.62 per share, while the most bearish prices it at UK£1.61. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting IWG's growth to accelerate, with the forecast 7.9% annualised growth to the end of 2024 ranking favourably alongside historical growth of 2.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 3.2% per year. It seems obvious that as part of the brighter growth outlook, IWG is expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around IWG's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates that is expected to perform better than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. With that said, earnings are more important to the long-term 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple IWG analysts - going out to 2026, and you can see them free on our platform here.
You can also view our analysis of IWG's balance sheet, and whether we think IWG is carrying too much debt, for free on our platform here.
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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.
