Yahoo Finance Victrex plc Just Missed EPS By 18%: Here's What Analysts Think Will Happen Next
It's been a good week for Victrex plc (LON:VCT) shareholders, because the company has just released its latest full-year results, and the shares gained 3.0% to UK£21.66. Revenues were in line with forecasts, at UK£266m, although statutory earnings per share came in 18% below what the analysts expected, at UK£0.63 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Victrex
Following the latest results, Victrex's 14 analysts are now forecasting revenues of UK£273.6m in 2021. This would be a satisfactory 2.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 33% to UK£0.83. Before this earnings report, the analysts had been forecasting revenues of UK£274.9m and earnings per share (EPS) of UK£0.85 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at UK£19.69, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Victrex at UK£24.00 per share, while the most bearish prices it at UK£17.00. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Victrex's past performance and to peers in the same industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 2.8%, in line with its 3.2% annual growth over the past five years. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues grow 6.2% next year. So it's pretty clear that Victrex is expected to grow slower than similar companies in the same industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Victrex. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Victrex'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.
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 Victrex going out to 2025, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Victrex 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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