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Today is shaping up negative for Victorian Plumbing Group plc (LON:VIC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following this downgrade, Victorian Plumbing Group's three analysts are forecasting 2022 revenues to be UK£271m, approximately in line with the last 12 months. Statutory earnings per share are supposed to nosedive 41% to UK£0.026 in the same period. Previously, the analysts had been modelling revenues of UK£318m and earnings per share (EPS) of UK£0.067 in 2022. Indeed, we can see that the analysts are a lot more bearish about Victorian Plumbing Group's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
It'll come as no surprise then, to learn that the analysts have cut their price target 53% to UK£1.22. 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. There are some variant perceptions on Victorian Plumbing Group, with the most bullish analyst valuing it at UK£1.30 and the most bearish at UK£0.99 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Victorian Plumbing Group's past performance and to peers in the same industry. We would highlight that Victorian Plumbing Group's revenue growth is expected to slow, with the forecast 0.8% annualised growth rate until the end of 2022 being well below the historical 25% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% 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 Victorian Plumbing Group.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Victorian Plumbing Group. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Victorian Plumbing Group going out to 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.