Decmil Group Limited (ASX:DCG) missed earnings with its latest yearly results, disappointing overly-optimistic forecasts. Unfortunately, Decmil Group delivered a serious earnings miss. Revenues of AU$378m were 14% below expectations, and statutory losses ballooned 942% to AU$0.68 per share. 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.
Following the latest results, Decmil Group's lone analyst are now forecasting revenues of AU$474.7m in 2023. This would be a sizeable 26% improvement in sales compared to the last 12 months. Decmil Group is also expected to turn profitable, with statutory earnings of AU$0.019 per share. Before this earnings report, the analyst had been forecasting revenues of AU$527.4m and earnings per share (EPS) of AU$0.021 in 2023. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
What's most unexpected is that the consensus price target rose 13% to AU$0.27, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.
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 analyst is definitely expecting Decmil Group's growth to accelerate, with the forecast 26% annualised growth to the end of 2023 ranking favourably alongside historical growth of 1.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.2% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Decmil Group to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Decmil Group going out as far as 2024, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with Decmil Group .
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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.
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