Analysts Have Lowered Expectations For Decmil Group Limited (ASX:DCG) After Its Latest Results

As you might know, Decmil Group Limited (ASX:DCG) last week released its latest full-year, and things did not turn out so great for shareholders. Unfortunately, Decmil Group delivered a serious earnings miss. Revenues of AU$378m were 14% below expectations, and statutory losses ballooned 942% to AU$0.68 per share. This is an important time for investors, as they can track a company's performance in its report, look at what expert is forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.

Check out our latest analysis for Decmil Group

Taking into account the latest results, the current consensus from Decmil Group's sole analyst is for revenues of AU$474.7m in 2023, which would reflect a major 26% increase on its sales over the past 12 months. Decmil Group is also expected to turn profitable, with statutory earnings of AU$0.019 per share. Yet prior to the latest earnings, the analyst had been anticipated revenues of AU$527.4m and earnings per share (EPS) of AU$0.021 in 2023. The analyst are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

What's most unexpected is that the consensus price target rose 13% to AU$0.27, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. The analyst is definitely expecting Decmil Group's growth to accelerate, with the forecast 26% annualised growth to the end of 2023 ranking favourably alongside historical growth of 1.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Decmil Group to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Decmil Group. They also downgraded their revenue estimates, although industry data suggests that Decmil Group's revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Decmil Group. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Decmil Group that you need to be mindful of.

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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.