The analysts covering The Brink's Company (NYSE:BCO) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Bidders are definitely seeing a different story, with the stock price of US$48.71 reflecting a 10% rise in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the latest downgrade, Brink's' twin analysts currently expect revenues in 2020 to be US$3.6b, approximately in line with the last 12 months. Statutory earnings per share are presumed to jump 134% to US$1.32. Prior to this update, the analysts had been forecasting revenues of US$4.3b and earnings per share (EPS) of US$2.32 in 2020. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.7%, a significant reduction from annual growth of 2.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Brink's is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Brink's' revenues are expected to grow slower than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Brink's, and we wouldn't blame shareholders for feeling a little more cautious themselves.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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