G8 Education Limited Just Missed EPS By 18%: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that G8 Education Limited (ASX:GEM) filed its half-yearly result this time last week. The early response was not positive, with shares down 6.5% to AU$1.30 in the past week. Revenues were in line with forecasts, at AU$483m, although statutory earnings per share came in 18% below what the analysts expected, at AU$0.025 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for G8 Education

Following last week's earnings report, G8 Education's six analysts are forecasting 2024 revenues to be AU$1.02b, approximately in line with the last 12 months. Per-share earnings are expected to swell 17% to AU$0.088. In the lead-up to this report, the analysts had been modelling revenues of AU$1.02b and earnings per share (EPS) of AU$0.089 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of AU$1.31, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic G8 Education analyst has a price target of AU$1.70 per share, while the most pessimistic values it at AU$0.56. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that G8 Education's revenue growth is expected to slow, with the forecast 1.7% annualised growth rate until the end of 2024 being well below the historical 3.2% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.9% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than G8 Education.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that G8 Education's revenue is expected to perform worse than the wider industry. The consensus price target held steady at AU$1.31, with the latest estimates not enough to have an impact on their price targets.

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. We have forecasts for G8 Education going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for G8 Education that you should be aware 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.