One SECOS Group Limited (ASX:SES) Broker Just Cut Their Revenue Forecasts By 10%

The analyst covering SECOS Group Limited (ASX:SES) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After the downgrade, the sole analyst covering SECOS Group is now predicting revenues of AU$39m in 2022. If met, this would reflect a substantial 22% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analyst was forecasting revenues of AU$43m in 2022. It looks like forecasts have become a fair bit less optimistic on SECOS Group, given the substantial drop in revenue estimates.

See our latest analysis for SECOS Group

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analyst is definitely expecting SECOS Group's growth to accelerate, with the forecast 22% annualised growth to the end of 2022 ranking favourably alongside historical growth of 6.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.2% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that SECOS Group is expected to grow much faster than its industry.

The Bottom Line

The clear low-light was that the analyst slashing their revenue forecasts for SECOS Group this year. They're also forecasting more rapid revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on SECOS Group after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with SECOS Group, including concerns around earnings quality. For more information, you can click here to discover this and the 2 other warning signs we've identified.

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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.