Revenue Beat: Accent Group Limited Exceeded Revenue Forecasts By 7.9% And Analysts Are Updating Their Estimates
It's been a sad week for Accent Group Limited (ASX:AX1), who've watched their investment drop 18% to AU$2.18 in the week since the company reported its full-year result. It was a workmanlike result, with revenues of AU$993m coming in 7.9% ahead of expectations, and statutory earnings per share of AU$0.14, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Accent Group
Following the latest results, Accent Group's five analysts are now forecasting revenues of AU$1.04b in 2022. This would be a credible 5.0% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to sink 17% to AU$0.12 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$1.08b and earnings per share (EPS) of AU$0.15 in 2022. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.
It'll come as no surprise then, to learn that the analysts have cut their price target 14% to AU$2.58. 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. The most optimistic Accent Group analyst has a price target of AU$2.90 per share, while the most pessimistic values it at AU$2.40. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Accent Group is an easy business to forecast or the the analysts are all using similar assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Accent Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 5.0% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Compare this to the 24 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.9% per year. So it's pretty clear that, while Accent Group's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Accent Group's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Accent Group going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Accent Group that you need to take into consideration.
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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