Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1710
    +0.0016 (+0.14%)
     
  • GBP/USD

    1.2628
    +0.0006 (+0.05%)
     
  • Bitcoin GBP

    56,073.68
    +1,065.63 (+1.94%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,332.62
    +164.55 (+0.41%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

Earnings Miss: Oxford Instruments plc Missed EPS By 13% And Analysts Are Revising Their Forecasts

It's been a pretty great week for Oxford Instruments plc (LON:OXIG) shareholders, with its shares surging 16% to UK£15.92 in the week since its latest interim results. It was not a great result overall. Although revenues beat expectations, hitting UK£166m, earnings missed analyst forecasts by 13%, coming in at just UK£0.25 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings consensus estimates to see what could be in store for next year.

Check out our latest analysis for Oxford Instruments

LSE:OXIG Past and Future Earnings, November 15th 2019
LSE:OXIG Past and Future Earnings, November 15th 2019

Taking into account the latest results, Oxford Instruments's eight analysts currently expect revenues in 2020 to be UK£350.9m, approximately in line with the last 12 months. Earnings per share are forecast to dip 4.5% to UK£0.57 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of UK£346.3m and earnings per share (EPS) of UK£0.64 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.

ADVERTISEMENT

The consensus price target held steady at UK£13.55, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Oxford Instruments analyst has a price target of UK£14.62 per share, while the most pessimistic values it at UK£10.70. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Oxford Instruments's past performance and to peers in the same market. Over the past five years, revenues have declined around 3.0% annually. On the bright side, analysts expect the decline to level off somewhat, with the forecast for a 0.6% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 5.0% per year. So it's pretty clear that, while it does have declining revenues, at least analysts expect Oxford Instruments to suffer less severely than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at UK£13.55, with the latest estimates not enough to have an impact on analysts' estimated valuations.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Oxford Instruments going out to 2023, and you can see them free on our platform here.

You can also see our analysis of Oxford Instruments's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.