CPPGroup Plc (LON:CPP) Just Reported Earnings, And Analysts Cut Their Target Price
Shareholders will be ecstatic, with their stake up 70% over the past week following CPPGroup Plc's (LON:CPP) latest full-year results. It was a pretty good result, with revenues of UK£139m, and CPPGroup came in a solid 13% ahead of expectations. The analyst typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.
See our latest analysis for CPPGroup
Following last week's earnings report, CPPGroup's single analyst are forecasting 2020 revenues to be UK£141.6m, approximately in line with the last 12 months. Prior to the latest earnings, the analyst was forecasting revenues of UK£141.6m in 2020, and did not provide an earnings per share estimate. Overall it looks like CPPGroup is performing in line with expectations, giventhe analyst has updated their numbers and there's been no real change to next year's forecast following these results.
The average price target fell 35% to UK£0.06, withthe analyst clearly having become less optimistic about CPPGroup'sprospects following its latest earnings.
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 CPPGroup's revenue growth will slow down substantially, with revenues next year expected to grow 2.0%, compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.6% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CPPGroup.
The Bottom Line
The most important thing to take away is that the analyst reconfirmed their revenue estimates for next year, suggesting that the business is performing in line with expectations. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
One CPPGroup broker/analyst has provided estimates out to 2021, which can be seen for free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with CPPGroup (at least 1 which can't be ignored) , and understanding these should be part of your investment process.
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