The SIG plc (LON:SHI) Interim Results Are Out And Analysts Have Published New Forecasts
Shareholders of SIG plc (LON:SHI) will be pleased this week, given that the stock price is up 16% to UK£0.33 following its latest half-yearly results. SIG reported in line with analyst predictions, delivering revenues of UK£1.4b and statutory earnings per share of UK£0.013, suggesting the business is executing well and in line with its plan. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on SIG after the latest results.
See our latest analysis for SIG
Taking into account the latest results, SIG's seven analysts currently expect revenues in 2023 to be UK£2.77b, approximately in line with the last 12 months. Statutory earnings per share are predicted to leap 234% to UK£0.013. Before this earnings report, the analysts had been forecasting revenues of UK£2.77b and earnings per share (EPS) of UK£0.013 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at UK£0.39, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values SIG at UK£0.50 per share, while the most bearish prices it at UK£0.30. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.0% by the end of 2023. This indicates a significant reduction from annual growth of 2.1% 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 8.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SIG is expected to lag the wider 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that SIG's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on SIG. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for SIG going out to 2025, and you can see them free on our platform here..
You still need to take note of risks, for example - SIG has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.
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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.
