Analysts Are Updating Their Super Retail Group Limited (ASX:SUL) Estimates After Its Half-Year Results

It's been a good week for Super Retail Group Limited (ASX:SUL) shareholders, because the company has just released its latest half-year results, and the shares gained 4.9% to AU$11.98. It was a credible result overall, with revenues of AU$1.8b and statutory earnings per share of AU$0.58 both in line with analyst estimates, showing that Super Retail Group is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Super Retail Group

After the latest results, the ten analysts covering Super Retail Group are now predicting revenues of AU$3.32b in 2021. If met, this would reflect a reasonable 5.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 14% to AU$1.21. In the lead-up to this report, the analysts had been modelling revenues of AU$3.25b and earnings per share (EPS) of AU$1.16 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of AU$12.80, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. Currently, the most bullish analyst values Super Retail Group at AU$15.00 per share, while the most bearish prices it at AU$8.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Super Retail Group shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Super Retail Group's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Super Retail Group'shistorical trends, as next year's 5.2% revenue growth is roughly in line with 4.8% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 5.1% per year. So although Super Retail Group is expected to maintain its revenue growth rate, it's only growing at about the rate of 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 Super Retail Group following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Super Retail Group going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Super Retail Group (of which 1 is significant!) you should know about.

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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.
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