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UK£11.81 - That's What Analysts Think Dunelm Group plc (LON:DNLM) Is Worth After These Results

Simply Wall St

Last week saw the newest full-year earnings release from Dunelm Group plc (LON:DNLM), an important milestone in the company's journey to build a stronger business. Results were roughly in line with estimates, with revenues of UK£1.1b and statutory earnings per share of UK£0.43. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Dunelm Group

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

After the latest results, the seven analysts covering Dunelm Group are now predicting revenues of UK£1.25b in 2021. If met, this would reflect a notable 18% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to dip 2.1% to UK£0.55 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£1.16b and earnings per share (EPS) of UK£0.53 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 8.2% to UK£11.81per share. 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. There are some variant perceptions on Dunelm Group, with the most bullish analyst valuing it at UK£16.00 and the most bearish at UK£5.20 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. The analysts are definitely expecting Dunelm Group's growth to accelerate, with the forecast 18% growth ranking favourably alongside historical growth of 6.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Dunelm Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Dunelm Group following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Dunelm Group going out to 2025, and you can see them free on our platform here..

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

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.