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CMC Markets Plc Just Recorded A 18% EPS Beat: Here's What Analysts Are Forecasting Next

Simply Wall St

CMC Markets Plc (LON:CMCX) investors will be delighted, with the company turning in some strong numbers with its latest results. CMC Markets beat earnings, with revenues hitting UK£102m, ahead of expectations, and earnings per share outperforming analyst reckonings by a solid 18%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.

View our latest analysis for CMC Markets

LSE:CMCX Past and Future Earnings, November 24th 2019

Taking into account the latest results, the current consensus from CMC Markets's five analysts is for revenues of UK£178.9m in 2020, which would reflect a decent 11% increase on its sales over the past 12 months. Earnings per share are expected to swell 18% to UK£0.10. Before this earnings report, analysts had been forecasting revenues of UK£170.8m and earnings per share (EPS) of UK£0.07 in 2020. So it seems there's been a definite increase in optimism about CMC Markets's future following the latest results, with a massive increase in the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that analysts have lifted their price target 6.8% to UK£1.25 per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values CMC Markets at UK£1.50 per share, while the most bearish prices it at UK£0.80. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await CMC Markets shareholders.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the CMC Markets's past performance and to peers in the same market. One thing stands out from these estimates, which is that analysts are forecasting CMC Markets to grow faster in the future than it has in the past, with revenues expected to grow 11%. If achieved, this would be a much better result than the 4.2% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue grow 6.4% per year. Although CMC Markets's revenues are expected to improve, it seems that analysts are also expecting it to 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 CMC Markets following these results. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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. At Simply Wall St, we have a full range of analyst estimates for CMC Markets going out to 2022, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.