Ainsworth Game Technology Limited Just Beat EPS By 7.8%: Here's What Analysts Think Will Happen Next

A week ago, Ainsworth Game Technology Limited (ASX:AGI) came out with a strong set of yearly numbers that could potentially lead to a re-rate of the stock. Results were good overall, with revenues beating analyst predictions by 5.8% to hit AU$220m. Statutory earnings per share (EPS) came in at AU$0.03, some 7.8% above whatthe analysts had expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Ainsworth Game Technology

Taking into account the latest results, the current consensus from Ainsworth Game Technology's three analysts is for revenues of AU$252.5m in 2023, which would reflect a meaningful 15% increase on its sales over the past 12 months. Per-share earnings are expected to leap 67% to AU$0.058. Before this earnings report, the analysts had been forecasting revenues of AU$247.0m and earnings per share (EPS) of AU$0.044 in 2023. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a sizeable expansion in earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of AU$1.08, suggesting that the forecast performance does not have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Ainsworth Game Technology at AU$1.25 per share, while the most bearish prices it at AU$0.98. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Ainsworth Game Technology is an easy business to forecast or the the analysts are all using similar assumptions.

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. For example, we noticed that Ainsworth Game Technology's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 15% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 13% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 9.1% per year. So it looks like Ainsworth Game Technology is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ainsworth Game Technology following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Ainsworth Game Technology going out to 2025, and you can see them free on our platform here..

We also provide an overview of the Ainsworth Game Technology Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.