Wagners Holding Company Limited (ASX:WGN) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market seems to be pricing in some improvement in the business too, with the stock up 7.4% over the past week, closing at AU$1.95. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
Following the upgrade, the latest consensus from Wagners Holding's four analysts is for revenues of AU$328m in 2021, which would reflect a notable 16% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 330% to AU$0.059. Before this latest update, the analysts had been forecasting revenues of AU$291m and earnings per share (EPS) of AU$0.043 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for Wagners Holding 33% to AU$2.11 on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Wagners Holding analyst has a price target of AU$2.50 per share, while the most pessimistic values it at AU$1.45. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Wagners Holding's rate of growth is expected to accelerate meaningfully, with the forecast 35% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 6.2% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Wagners Holding to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Wagners Holding.
Analysts are definitely bullish on Wagners Holding, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including its declining profit margins. For more information, you can click through to our platform to learn more about this and the 1 other risk we've identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
If you decide to trade Wagners Holding, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.