SIG plc (LON:SHI) Analysts Are Pretty Bullish On The Stock After Recent Results

Shareholders might have noticed that SIG plc (LON:SHI) filed its yearly result this time last week. The early response was not positive, with shares down 2.5% to UK£0.39 in the past week. Revenues of UK£1.9b beat expectations by a respectable 2.5%, although statutory losses per share increased. SIG lost UK£0.24, which was 59% more than what the analysts had included in their models. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for SIG

Taking into account the latest results, the consensus forecast from SIG's seven analysts is for revenues of UK£2.01b in 2021, which would reflect a reasonable 7.5% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 93% to UK£0.017. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£2.01b and losses of UK£0.017 per share in 2021. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although sales forecasts held steady, the consensus also made a pronounced increase to its losses per share forecasts.

Despite expectations of heavier losses next year,the analysts have lifted their price target 12% to UK£0.45, perhaps implying these losses are not expected to be recurring over the long term. 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 SIG, with the most bullish analyst valuing it at UK£1.00 and the most bearish at UK£0.30 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. One thing stands out from these estimates, which is that SIG is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.5% annualised growth until the end of 2021. If achieved, this would be a much better result than the 7.4% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 4.2% per year. So it looks like SIG is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at SIG. 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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for SIG going out to 2023, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for SIG (1 is concerning!) that we have uncovered.

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This article by Simply Wall St is general in nature. 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.
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