Yahoo Finance Costain Group PLC Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Costain Group PLC (LON:COST) shareholders are probably feeling a little disappointed, since its shares fell 5.9% to UK£0.64 in the week after its latest annual results. Revenues UK£1.3b disappointed slightly, at3.7% below what the analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of UK£0.078 coming in 17% above what was anticipated. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Costain Group
Following the recent earnings report, the consensus from twin analysts covering Costain Group is for revenues of UK£1.28b in 2024. This implies a measurable 3.8% decline in revenue compared to the last 12 months. Per-share earnings are expected to soar 29% to UK£0.10. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£1.32b and earnings per share (EPS) of UK£0.09 in 2024. Although the analysts have lowered their revenue forecasts, they've also made a substantial gain in their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.
The average price target increased 5.0% to UK£0.89, with the analysts signalling that the improved earnings outlook is more important to the company's valuation than its revenue.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.8% by the end of 2024. This indicates a significant reduction from annual growth of 2.4% 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 3.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Costain Group is expected to lag the wider 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 Costain Group following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Costain Group. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.
Even so, be aware that Costain Group is showing 2 warning signs in our investment analysis , 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.
