Earnings Report: OSB Group Plc Missed Revenue Estimates By 31%

Investors in OSB Group Plc (LON:OSB) had a good week, as its shares rose 9.5% to close at UK£4.78 following the release of its annual results. Sales fell 31% shy of analyst expectations, coming in at UK£381m. Statutory earnings per share slightly exceeded forecasts at UK£0.42 but overall it looks like the analystswere a bit over-enthusiastic on revenues. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for OSB Group

Taking into account the latest results, the current consensus from OSB Group's ten analysts is for revenues of UK£608.7m in 2021, which would reflect a sizeable 60% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 32% to UK£0.54. In the lead-up to this report, the analysts had been modelling revenues of UK£611.1m and earnings per share (EPS) of UK£0.53 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at UK£5.27. 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 OSB Group analyst has a price target of UK£6.10 per share, while the most pessimistic values it at UK£4.10. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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 OSB Group's rate of growth is expected to accelerate meaningfully, with the forecast 60% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 35% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect OSB Group to grow faster 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at UK£5.27, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for OSB Group going out to 2023, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for OSB Group you should know about.

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