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

It's shaping up to be a tough period for DCC plc (LON:DCC), which a week ago released some disappointing annual results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at UK£18b, statutory earnings missed forecasts by an incredible 43%, coming in at just UK£2.08 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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After the latest results, the 13 analysts covering DCC are now predicting revenues of UK£18.7b in 2026. If met, this would reflect a reasonable 4.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 80% to UK£3.80. Before this earnings report, the analysts had been forecasting revenues of UK£18.4b and earnings per share (EPS) of UK£3.93 in 2026. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

See our latest analysis for DCC

The consensus price target held steady at UK£63.08, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values DCC at UK£90.00 per share, while the most bearish prices it at UK£44.91. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that DCC's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 4.0% growth on an annualised basis. This is compared to a historical growth rate of 9.2% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that DCC is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at UK£63.08, 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 DCC. Long-term earnings power is much more important than next year's profits. We have forecasts for DCC going out to 2028, and you can see them free on our platform here.

You still need to take note of risks, for example - DCC has 2 warning signs we think you should be aware of.

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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.