Yahoo Finance Kainos Group plc Just Missed Earnings - But Analysts Have Updated Their Models
As you might know, Kainos Group plc (LON:KNOS) recently reported its yearly numbers. It looks like the results were a bit of a negative overall. While revenues of UK£235m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 7.0% to hit UK£0.32 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Kainos Group after the latest results.
View our latest analysis for Kainos Group
Taking into account the latest results, the current consensus from Kainos Group's six analysts is for revenues of UK£260.3m in 2022, which would reflect a solid 11% increase on its sales over the past 12 months. Statutory earnings per share are predicted to increase 5.0% to UK£0.34. Before this earnings report, the analysts had been forecasting revenues of UK£241.0m and earnings per share (EPS) of UK£0.35 in 2022. There doesn't appear to have been a major change in sentiment following the results, other than the modest lift to revenue estimates.
It may not be a surprise to see thatthe analysts have reconfirmed their price target of UK£15.91, implying that the uplift in sales is not expected to greatly contribute to Kainos Group's valuation in the near term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Kainos Group at UK£18.00 per share, while the most bearish prices it at UK£14.51. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Kainos Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 24% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.3% annually. Factoring in the forecast slowdown in growth, it looks like Kainos Group is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Kainos Group going out to 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Kainos Group that 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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