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PageGroup plc Just Reported Earnings, And Analysts Cut Their Target Price

Simply Wall St

Last week, you might have seen that PageGroup plc (LON:PAGE) released its full-year result to the market. The early response was not positive, with shares down 6.5% to UK£3.80 in the past week. It was a workmanlike result, with revenues of UK£1.7b coming in 2.6% ahead of expectations, and statutory earnings per share of UK£0.32, in line with analyst appraisals. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.

View our latest analysis for PageGroup

LSE:PAGE Past and Future Earnings, March 8th 2020

After the latest results, the consensus from PageGroup's nine analysts is for revenues of UK£1.56b in 2020, which would reflect a noticeable 5.4% decline in sales compared to the last year of performance. Statutory earnings per share are expected to decrease 9.4% to UK£0.29 in the same period. Before this earnings report, analysts had been forecasting revenues of UK£1.64b and earnings per share (EPS) of UK£0.33 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a substantial drop in earnings per share forecasts.

The consensus price target fell 6.5% to UK£4.92, with the weaker earnings outlook clearly leading analyst valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values PageGroup at UK£6.00 per share, while the most bearish prices it at UK£3.60. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 5.4% a significant reduction from annual growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 5.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect PageGroup to grow slower than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of PageGroup's future valuation.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for PageGroup going out to 2024, and you can see them free on our platform here..

We also provide an overview of the PageGroup Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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