GR Engineering Services Limited Just Recorded A 14% Revenue Beat: Here's What Analysts Think

GR Engineering Services Limited (ASX:GNG) came out with its half-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues of AU$176m beat forecasts by 14%, although statutory earnings per share disappointed slightly, coming in 4.7% below expectations at AU$0.054. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for GR Engineering Services

Following the latest results, GR Engineering Services' two analysts are now forecasting revenues of AU$370.2m in 2021. This would be a huge 21% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 67% to AU$0.14. Before this earnings report, the analysts had been forecasting revenues of AU$354.2m and earnings per share (EPS) of AU$0.10 in 2021. So it seems there's been a definite increase in optimism about GR Engineering Services' future following the latest results, with a very substantial lift in the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 17% to AU$1.84per share.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that GR Engineering Services' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 21%, well above its historical decline of 2.3% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to decline 3.3% next year. So it's pretty clear that GR Engineering Services is expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around GR Engineering Services' earnings potential next year. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for GR Engineering Services that you need to be mindful of.

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