Yahoo Finance Time To Worry? Analysts Are Downgrading Their Midwich Group Plc (LON:MIDW) Outlook
Market forces rained on the parade of Midwich Group Plc (LON:MIDW) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following this downgrade, Midwich Group's three analysts are forecasting 2020 revenues to be UK£682m, approximately in line with the last 12 months. Statutory earnings per share are supposed to plunge 89% to UK£0.024 in the same period. Prior to this update, the analysts had been forecasting revenues of UK£798m and earnings per share (EPS) of UK£0.13 in 2020. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.
Check out our latest analysis for Midwich Group
The consensus price target fell 12% to UK£5.02, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 Midwich Group, with the most bullish analyst valuing it at UK£5.25 and the most bearish at UK£4.60 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Midwich Group's revenue growth is expected to slow, with forecast 1.3% increase next year well below the historical 16% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that Midwich Group is also expected to grow slower than other industry participants.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Midwich Group. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Midwich Group.
There might be good reason for analyst bearishness towards Midwich Group, like dilutive stock issuance over the past year. Learn more, and discover the 2 other concerns we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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