Results: Paragon Banking Group PLC Beat Earnings Expectations And Analysts Now Have New Forecasts

As you might know, Paragon Banking Group PLC (LON:PAG) just kicked off its latest annual results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of UK£400m, some 6.7% above estimates, and statutory earnings per share (EPS) coming in at UK£1.26, 62% ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Paragon Banking Group

Taking into account the latest results, the current consensus from Paragon Banking Group's nine analysts is for revenues of UK£435.8m in 2023, which would reflect a decent 8.9% increase on its sales over the past 12 months. Statutory earnings per share are forecast to crater 62% to UK£0.52 in the same period. Before this earnings report, the analysts had been forecasting revenues of UK£430.4m and earnings per share (EPS) of UK£0.51 in 2023. 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.

There were no changes to revenue or earnings estimates or the price target of UK£6.84, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Paragon Banking Group, with the most bullish analyst valuing it at UK£7.65 and the most bearish at UK£5.40 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Paragon Banking Group's rate of growth is expected to accelerate meaningfully, with the forecast 8.9% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 6.3% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.2% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Paragon Banking Group is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Paragon Banking Group analysts - going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Paragon Banking Group (1 shouldn't be ignored) you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.