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Virgin Money UK PLC (LON:VMUK) defied analyst predictions to release its full-year results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of UK£1.6b, some 4.7% above estimates, and statutory earnings per share (EPS) coming in at UK£0.27, 35% ahead of 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the 21 analysts covering Virgin Money UK are now predicting revenues of UK£1.66b in 2022. If met, this would reflect a satisfactory 2.5% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 24% to UK£0.21 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£1.66b and earnings per share (EPS) of UK£0.21 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of UK£2.21, suggesting that the company has met expectations in its recent result. 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. The most optimistic Virgin Money UK analyst has a price target of UK£2.70 per share, while the most pessimistic values it at UK£1.65. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Virgin Money UK shareholders.
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 Virgin Money UK's revenue growth is expected to slow, with the forecast 2.5% annualised growth rate until the end of 2022 being well below the historical 6.9% 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 5.0% per year. Factoring in the forecast slowdown in growth, it seems obvious that Virgin Money UK is also expected to grow slower than other industry participants.
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. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will 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.
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 Virgin Money UK 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 Virgin Money UK that you need to take into consideration.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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