Analysts Are Updating Their QinetiQ Group plc (LON:QQ.) Estimates After Its Annual Results

QinetiQ Group plc (LON:QQ.) came out with its yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like the results were a bit of a negative overall. While revenues of UK£1.3b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.5% to hit UK£0.22 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on QinetiQ Group after the latest results.

Check out our latest analysis for QinetiQ Group

After the latest results, the eight analysts covering QinetiQ Group are now predicting revenues of UK£1.31b in 2022. If met, this would reflect an okay 2.8% improvement in sales compared to the last 12 months. Statutory per share are forecast to be UK£0.22, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£1.30b and earnings per share (EPS) of UK£0.21 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at UK£3.75, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on QinetiQ Group, with the most bullish analyst valuing it at UK£4.44 and the most bearish at UK£3.29 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that QinetiQ Group's revenue growth is expected to slow, with the forecast 2.8% annualised growth rate until the end of 2022 being well below the historical 11% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.3% per year. Factoring in the forecast slowdown in growth, it seems obvious that QinetiQ Group is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards QinetiQ Group following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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.

With that in mind, we wouldn't be too quick to come to a conclusion on QinetiQ Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for QinetiQ Group going out to 2024, and you can see them free on our platform here..

Before you take the next step you should know about the 1 warning sign for QinetiQ Group that we have uncovered.

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