Yahoo Finance QinetiQ Group plc Just Beat Revenue By 19%: Here's What Analysts Think Will Happen Next
The investors in QinetiQ Group plc's (LON:QQ.) will be rubbing their hands together with glee today, after the share price leapt 22% to UK£3.11 in the week following its half-year results. QinetiQ Group beat revenue forecasts by a solid 19% to hit UK£603m. Statutory earnings per share came in at UK£0.19, in line with expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on QinetiQ Group after the latest results.
View our latest analysis for QinetiQ Group
Taking into account the latest results, the consensus forecast from QinetiQ Group's nine analysts is for revenues of UK£1.21b in 2021, which would reflect a satisfactory 2.1% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to decrease 5.4% to UK£0.20 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£1.14b and earnings per share (EPS) of UK£0.20 in 2021. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a slight bump in to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of UK£3.25, suggesting the analysts are focused on earnings as the driver of value creation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on QinetiQ Group, with the most bullish analyst valuing it at UK£3.80 and the most bearish at UK£2.65 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. We would highlight that QinetiQ Group's revenue growth is expected to slow, with forecast 2.1% increase next year well below the historical 9.2%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.1% per year. Factoring in the forecast slowdown in growth, it seems obvious that QinetiQ Group is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, although our data indicates sales 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 forecasts for QinetiQ Group going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for QinetiQ Group that you need to take into consideration.
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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