The Smartgroup Corporation Ltd (ASX:SIQ) Half-Year Results Are Out And Analysts Have Published New Forecasts

Smartgroup Corporation Ltd (ASX:SIQ) missed earnings with its latest interim results, disappointing overly-optimistic forecasters. Smartgroup missed analyst forecasts, with revenues of AU$159m and statutory earnings per share (EPS) of AU$0.29, falling short by 3.0% and 3.7% respectively. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Smartgroup after the latest results.

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Taking into account the latest results, the most recent consensus for Smartgroup from eight analysts is for revenues of AU$324.1m in 2025. If met, it would imply an okay 2.4% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to shrink 3.1% to AU$0.59 in the same period. Before this earnings report, the analysts had been forecasting revenues of AU$325.2m and earnings per share (EPS) of AU$0.58 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

View our latest analysis for Smartgroup

The consensus price target was unchanged at AU$9.12, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Smartgroup, with the most bullish analyst valuing it at AU$10.30 and the most bearish at AU$8.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Smartgroup's revenue growth is expected to slow, with the forecast 4.9% annualised growth rate until the end of 2025 being well below the historical 7.8% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.6% per year. So it's pretty clear that, while Smartgroup's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Smartgroup's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Smartgroup. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Smartgroup analysts - going out to 2027, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Smartgroup .

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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.