Earnings Update: Rotork plc (LON:ROR) Just Reported Its Yearly Results And Analysts Are Updating Their Forecasts

Investors in Rotork plc (LON:ROR) had a good week, as its shares rose 4.3% to close at UK£3.24 following the release of its yearly results. Rotork reported in line with analyst predictions, delivering revenues of UK£719m and statutory earnings per share of UK£0.13, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 Rotork

After the latest results, the 17 analysts covering Rotork are now predicting revenues of UK£752.1m in 2024. If met, this would reflect a reasonable 4.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 4.5% to UK£0.14. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£758.5m and earnings per share (EPS) of UK£0.15 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at UK£3.52, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Rotork analyst has a price target of UK£4.15 per share, while the most pessimistic values it at UK£3.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. One thing stands out from these estimates, which is that Rotork is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.6% annualised growth until the end of 2024. If achieved, this would be a much better result than the 0.4% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.8% annually. So it looks like Rotork is expected to grow at about the same rate as 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 Rotork. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Rotork going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Rotork that you need to take into consideration.

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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.