Groupe ADP (EPA:ADP) Analysts Just Cut Their EPS Forecasts Substantially
Today is shaping up negative for Groupe ADP (EPA:ADP) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
After the downgrade, the consensus from Groupe ADP's 15 analysts is for revenues of €4.3b in 2020, which would reflect a chunky 9.2% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to sink 18% to €4.43 in the same period. Before this latest update, the analysts had been forecasting revenues of €4.8b and earnings per share (EPS) of €5.26 in 2020. Indeed, we can see that the analysts are a lot more bearish about Groupe ADP's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for Groupe ADP
The consensus price target fell 13% to €126, with the weaker earnings outlook clearly leading analyst valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Groupe ADP analyst has a price target of €190 per share, while the most pessimistic values it at €85.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Groupe ADP's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 9.2%, a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.0% annually for the foreseeable future. It's pretty clear that Groupe ADP's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Groupe ADP's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Groupe ADP.
Worse, Groupe ADP is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. You can learn more about our debt analysis for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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