Earnings Miss: Cohort plc Missed EPS By 43% And Analysts Are Revising Their Forecasts

It's been a pretty great week for Cohort plc (LON:CHRT) shareholders, with its shares surging 15% to UK£5.83 in the week since its latest yearly results. Results overall were not great, with earnings of UK£0.13 per share falling drastically short of analyst expectations. Meanwhile revenues hit UK£143m and were slightly better than forecasts. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Cohort

Taking into account the latest results, the consensus forecast from Cohort's three analysts is for revenues of UK£156.8m in 2022, which would reflect a meaningful 9.4% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 79% to UK£0.24. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£156.4m and earnings per share (EPS) of UK£0.29 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

The consensus price target held steady at UK£6.61, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Cohort, with the most bullish analyst valuing it at UK£6.90 and the most bearish at UK£6.32 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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 Cohort's rate of growth is expected to accelerate meaningfully, with the forecast 9.4% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 5.1% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Cohort to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Cohort. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at UK£6.61, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Cohort. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Cohort analysts - going out to 2023, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Cohort that you should be aware of.

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