Earnings Update: 888 Holdings plc (LON:888) Just Reported And Analysts Are Boosting Their Estimates
The investors in 888 Holdings plc's (LON:888) will be rubbing their hands together with glee today, after the share price leapt 27% to UK£2.64 in the week following its interim results. It was a workmanlike result, with revenues of US$379m coming in 3.3% ahead of expectations, and statutory earnings per share of US$0.11, in line with analyst appraisals. The analysts 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on 888 Holdings after the latest results.
See our latest analysis for 888 Holdings
Taking into account the latest results, the most recent consensus for 888 Holdings from seven analysts is for revenues of US$727.3m in 2020 which, if met, would be a notable 9.8% increase on its sales over the past 12 months. Per-share earnings are expected to rise 9.1% to US$0.20. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$620.5m and earnings per share (EPS) of US$0.14 in 2020. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 28% to US$3.40per share. 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 888 Holdings analyst has a price target of US$3.64 per share, while the most pessimistic values it at US$1.48. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting 888 Holdings' growth to accelerate, with the forecast 9.8% growth ranking favourably alongside historical growth of 5.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.9% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that 888 Holdings is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards 888 Holdings following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that 888 Holdings will grow in line with the overall 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 forecasts for 888 Holdings going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with 888 Holdings .
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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