Yahoo Finance Earnings Beat: IMI plc Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Investors in IMI plc (LON:IMI) had a good week, as its shares rose 7.0% to close at UK£10.63 following the release of its half-yearly results. It looks like a credible result overall - although revenues of UK£867m were in line with what the analysts predicted, IMI surprised by delivering a statutory profit of UK£0.58 per share, a notable 10% above expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for IMI
Following the recent earnings report, the consensus from 17 analysts covering IMI is for revenues of UK£1.77b in 2020, implying a discernible 3.5% decline in sales compared to the last 12 months. Statutory earnings per share are expected to drop 17% to UK£0.47 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£1.74b and earnings per share (EPS) of UK£0.39 in 2020. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 7.9% to UK£10.77. 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 IMI, with the most bullish analyst valuing it at UK£12.50 and the most bearish at UK£6.35 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.5%, a significant reduction from annual growth of 4.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.4% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - IMI is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around IMI's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that IMI's revenues are expected to perform worse 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for IMI going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for IMI you should be aware of.
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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