Analysts' Revenue Estimates For Steadfast Group Limited (ASX:SDF) Are Surging Higher

Shareholders in Steadfast Group Limited (ASX:SDF) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Investor sentiment seems to be improving too, with the share price up 6.4% to AU$4.99 over the past 7 days. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the most recent consensus for Steadfast Group from its six analysts is for revenues of AU$1.0b in 2022 which, if met, would be a solid 10% increase on its sales over the past 12 months. Statutory earnings per share are presumed to increase 4.7% to AU$0.17. Previously, the analysts had been modelling revenues of AU$946m and earnings per share (EPS) of AU$0.17 in 2022. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

View our latest analysis for Steadfast Group

Analysts increased their price target 7.8% to AU$4.86, perhaps signalling that higher revenues are a strong leading indicator for Steadfast Group's valuation. 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. Currently, the most bullish analyst values Steadfast Group at AU$5.30 per share, while the most bearish prices it at AU$4.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

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. It's pretty clear that there is an expectation that Steadfast Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 14% 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 2.9% annually. Even after the forecast slowdown in growth, it seems obvious that Steadfast Group is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Steadfast Group.

Still, 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 Steadfast Group going out to 2024, and you can see them free on our platform here..

You can also see our analysis of Steadfast Group's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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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