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Team17 Group PLC Beat Revenue Forecasts By 7.7%: Here's What Analysts Are Forecasting Next

Simply Wall St

It's been a good week for Team17 Group PLC (LON:TM17) shareholders, because the company has just released its latest half-yearly results, and the shares gained 7.5% to UK£7.20. It was a workmanlike result, with revenues of UK£39m coming in 7.7% ahead of expectations, and statutory earnings per share of UK£0.13, in line with analyst appraisals. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Team17 Group

earnings-and-revenue-growth
earnings-and-revenue-growth

After the latest results, the eleven analysts covering Team17 Group are now predicting revenues of UK£74.0m in 2020. If met, this would reflect a reasonable 5.5% improvement in sales compared to the last 12 months. Statutory per share are forecast to be UK£0.15, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£70.6m and earnings per share (EPS) of UK£0.14 in 2020. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 11% to UK£6.66per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Team17 Group, with the most bullish analyst valuing it at UK£8.00 and the most bearish at UK£3.90 per share. This is a fairly broad spread of estimates, suggesting that 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 Team17 Group's past performance and to peers in the same industry. We would highlight that Team17 Group's revenue growth is expected to slow, with forecast 5.5% increase next year well below the historical 21% growth over the last year. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Team17 Group.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Team17 Group's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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 in mind, we wouldn't be too quick to come to a conclusion on Team17 Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Team17 Group analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Team17 Group that we have uncovered.

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. 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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