Spirax-Sarco Engineering plc Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's been a good week for Spirax-Sarco Engineering plc (LON:SPX) shareholders, because the company has just released its latest annual results, and the shares gained 2.5% to UK£106. Revenues of UK£1.7b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at UK£2.49, missing estimates by 5.3%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Spirax-Sarco Engineering after the latest results.

See our latest analysis for Spirax-Sarco Engineering

Taking into account the latest results, the most recent consensus for Spirax-Sarco Engineering from 14 analysts is for revenues of UK£1.76b in 2024. If met, it would imply a satisfactory 4.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to expand 19% to UK£2.97. In the lead-up to this report, the analysts had been modelling revenues of UK£1.76b and earnings per share (EPS) of UK£3.08 in 2024. 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.

It might be a surprise to learn that the consensus price target was broadly unchanged at UK£99.61, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Spirax-Sarco Engineering analyst has a price target of UK£125 per share, while the most pessimistic values it at UK£80.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Spirax-Sarco Engineering shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Spirax-Sarco Engineering's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Spirax-Sarco Engineering's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.4% growth on an annualised basis. This is compared to a historical growth rate of 8.6% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.8% annually. Factoring in the forecast slowdown in growth, it looks like Spirax-Sarco Engineering is forecast 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 Spirax-Sarco Engineering. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at UK£99.61, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Spirax-Sarco Engineering analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Spirax-Sarco Engineering , and understanding this should be part of your investment process.

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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.