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It's been a pretty great week for Computacenter plc (LON:CCC) shareholders, with its shares surging 12% to UK£23.50 in the week since its latest interim results. The result was positive overall - although revenues of UK£2.5b were in line with what the analysts predicted, Computacenter surprised by delivering a statutory profit of UK£0.45 per share, modestly greater than expected. 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.
Following last week's earnings report, Computacenter's five analysts are forecasting 2020 revenues to be UK£5.16b, approximately in line with the last 12 months. Per-share earnings are expected to rise 8.3% to UK£1.11. In the lead-up to this report, the analysts had been modelling revenues of UK£5.11b and earnings per share (EPS) of UK£0.91 in 2020. Although the revenue estimates have not really changed, we can see there's been a considerable lift to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target rose 9.2% to UK£22.30, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Computacenter analyst has a price target of UK£26.00 per share, while the most pessimistic values it at UK£15.00. 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 Computacenter shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Computacenter's revenue growth will slow down substantially, with revenues next year expected to grow 1.4%, compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that Computacenter is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Computacenter's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Computacenter's revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Computacenter analysts - going out to 2023, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Computacenter (1 is potentially serious!) that you need to be mindful of.
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. 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.
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