Centurion Corporation Limited (SGX:OU8) defied analyst predictions to release its full-year results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of S$134m, some 2.6% above estimates, and statutory earnings per share (EPS) coming in at S$0.12, 226% ahead of expectations. Following the result, 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the latest consensus from Centurion's three analysts is for revenues of S$140.7m in 2020, which would reflect a satisfactory 4.7% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to plummet 62% to S$0.045 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of S$138.8m and earnings per share (EPS) of S$0.043 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 22% to S$0.52, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Centurion at S$0.61 per share, while the most bearish prices it at S$0.43. 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.
In addition, we can look to Centurion's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Analysts are definitely expecting Centurion's growth to accelerate, with the forecast 4.7% growth ranking favourably alongside historical growth of 2.0% per annum over the past five years. Compare this with other companies in the same market, which are forecast to see a revenue decline of 11% next year. So it's clear that despite the acceleration in growth, Centurion is expected to grow meaningfully slower than the market average.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Centurion's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Centurion analysts - going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Centurion's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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