Yahoo Finance Porvair plc Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Porvair plc (LON:PRV) shareholders are probably feeling a little disappointed, since its shares fell 4.7% to UK£5.28 in the week after its latest yearly results. It looks like a credible result overall - although revenues of UK£135m were in line with what the analysts predicted, Porvair surprised by delivering a statutory profit of UK£0.18 per share, a notable 18% above expectations. 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.
Check out our latest analysis for Porvair
Taking into account the latest results, Porvair's three analysts currently expect revenues in 2021 to be UK£134.4m, approximately in line with the last 12 months. Per-share earnings are expected to rise 3.4% to UK£0.19. Before this earnings report, the analysts had been forecasting revenues of UK£134.8m and earnings per share (EPS) of UK£0.21 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at UK£6.27, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Porvair, with the most bullish analyst valuing it at UK£6.40 and the most bearish at UK£6.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. We would highlight that sales are expected to reverse, with the forecast 0.4% revenue decline a notable change from historical growth of 8.4% 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 3.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Porvair is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Porvair. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Porvair's revenues are expected to perform worse than 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.
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. We have estimates - from multiple Porvair analysts - going out to 2023, and you can see them free on our platform here.
You can also see our analysis of Porvair's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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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