One thing we could say about the covering analyst on Victory Offices Limited (ASX:VOL) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.
Following the latest downgrade, the current consensus, from the solitary analyst covering Victory Offices, is for revenues of AU$42m in 2020, which would reflect a concerning 21% reduction in Victory Offices' sales over the past 12 months. Statutory earnings per share are supposed to tumble 91% to AU$0.025 in the same period. Before this latest update, the analyst had been forecasting revenues of AU$57m and earnings per share (EPS) of AU$0.18 in 2020. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.
It'll come as no surprise then, to learn that the analyst has cut their price target 69% to AU$0.86.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 21%, a significant reduction from annual growth of 34% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Victory Offices is expected to lag the wider industry.
The Bottom Line
The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Victory Offices. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Victory Offices, including concerns around earnings quality. Learn more, and discover the 1 other flag we've identified, for free on our platform here.
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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. Thank you for reading.