Compass Group PLC Just Missed EPS By 7.2%: Here's What Analysts Think Will Happen Next
Last week saw the newest annual earnings release from Compass Group PLC (LON:CPG), an important milestone in the company's journey to build a stronger business. Revenues of UK£31b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at UK£0.75, missing estimates by 7.2%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Compass Group
Taking into account the latest results, the current consensus from Compass Group's 20 analysts is for revenues of UK£33.0b in 2024. This would reflect a modest 6.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 23% to UK£0.95. Before this earnings report, the analysts had been forecasting revenues of UK£33.2b and earnings per share (EPS) of UK£0.96 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at UK£23.20. 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. There are some variant perceptions on Compass Group, with the most bullish analyst valuing it at UK£26.00 and the most bearish at UK£19.25 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Compass Group's growth to accelerate, with the forecast 6.4% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.5% annually. Compass Group is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Compass Group going out to 2026, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 1 warning sign for Compass Group that you should be aware of.
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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.
