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A week ago, Steadfast Group Limited (ASX:SDF) came out with a strong set of full-year numbers that could potentially lead to a re-rate of the stock. Results were good overall, with revenues beating analyst predictions by 5.6% to hit AU$944m. Statutory earnings per share (EPS) came in at AU$0.17, some 2.1% above whatthe analysts had expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Steadfast Group's six analysts are now forecasting revenues of AU$1.04b in 2022. This would be a solid 10% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 4.7% to AU$0.17. Before this earnings report, the analysts had been forecasting revenues of AU$946.4m and earnings per share (EPS) of AU$0.17 in 2022. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.
The consensus price target increased 5.2% to AU$4.74, with an improved revenue forecast carrying the promise of a more valuable business, in time. 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 Steadfast Group analyst has a price target of AU$5.30 per share, while the most pessimistic values it at AU$4.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Steadfast Group's revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2022 being well below the historical 14% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.8% per year. So it's pretty clear that, while Steadfast Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Steadfast Group going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Steadfast Group that you should be aware of.
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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