NatWest Group plc Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Investors in NatWest Group plc (LON:NWG) had a good week, as its shares rose 8.3% to close at UK£2.25 following the release of its full-year results. It looks like a credible result overall - although revenues of UK£14b were in line with what the analysts predicted, NatWest Group surprised by delivering a statutory profit of UK£0.48 per share, a notable 13% above 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on NatWest Group after the latest results.

See our latest analysis for NatWest Group

Following the recent earnings report, the consensus from 17 analysts covering NatWest Group is for revenues of UK£13.7b in 2024. This implies a discernible 3.7% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to dive 29% to UK£0.37 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£13.9b and earnings per share (EPS) of UK£0.37 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at UK£2.88. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on NatWest Group, with the most bullish analyst valuing it at UK£5.00 and the most bearish at UK£1.40 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.7% by the end of 2024. This indicates a significant reduction from annual growth of 4.3% 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 0.5% per year. It's pretty clear that NatWest Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that NatWest Group's revenue is expected to perform worse than the wider industry. The consensus price target held steady at UK£2.88, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple NatWest Group analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with NatWest Group (at least 1 which doesn't sit too well with us) , and understanding these should be part of your investment process.

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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.