Earnings Update: Inghams Group Limited (ASX:ING) Just Reported Its Annual Results And Analysts Are Updating Their Forecasts

It's been a good week for Inghams Group Limited (ASX:ING) shareholders, because the company has just released its latest yearly results, and the shares gained 6.0% to AU$4.09. Results were roughly in line with estimates, with revenues of AU$2.7b and statutory earnings per share of AU$0.22. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Inghams Group

Taking into account the latest results, the consensus forecast from Inghams Group's eight analysts is for revenues of AU$2.72b in 2022, which would reflect a credible 2.0% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to expand 19% to AU$0.27. In the lead-up to this report, the analysts had been modelling revenues of AU$2.73b and earnings per share (EPS) of AU$0.26 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at AU$4.20, 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 Inghams Group, with the most bullish analyst valuing it at AU$4.50 and the most bearish at AU$3.70 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Inghams Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Inghams Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 2.0% growth on an annualised basis. This is compared to a historical growth rate of 2.6% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.4% per year. Factoring in the forecast slowdown in growth, it seems obvious that Inghams Group is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Inghams Group's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Inghams Group'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.

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 estimates - from multiple Inghams Group analysts - going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Inghams Group you should be aware of, and 1 of them shouldn't be ignored.

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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.
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