Pact Group Holdings Ltd (ASX:PGH) Just Reported And Analysts Have Been Lifting Their Price Targets

It's been a pretty great week for Pact Group Holdings Ltd (ASX:PGH) shareholders, with its shares surging 10% to AU$2.96 in the week since its latest half-yearly results. Pact Group Holdings reported in line with analyst predictions, delivering revenues of AU$894m and statutory earnings per share of AU$0.26, suggesting the business is executing well and in line with its plan. 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 Pact Group Holdings

Taking into account the latest results, Pact Group Holdings' six analysts currently expect revenues in 2021 to be AU$1.80b, approximately in line with the last 12 months. Statutory earnings per share are forecast to crater 22% to AU$0.24 in the same period. In the lead-up to this report, the analysts had been modelling revenues of AU$1.80b and earnings per share (EPS) of AU$0.18 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.

The consensus price target rose 6.8% to AU$3.10, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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 Pact Group Holdings, with the most bullish analyst valuing it at AU$3.60 and the most bearish at AU$2.70 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.3%, a significant reduction from annual growth of 7.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.3% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Pact Group Holdings is expected to lag the wider industry.

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 Pact Group Holdings following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Pact Group Holdings' revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Pact Group Holdings going out to 2023, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Pact Group Holdings (2 are significant) you should be aware of.

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