Last week, you might have seen that Vesuvius plc (LON:VSVS) released its half-yearly result to the market. The early response was not positive, with shares down 2.2% to UK£5.25 in the past week. Results overall were respectable, with statutory earnings of UK£0.15 per share roughly in line with what the analysts had forecast. Revenues of UK£808m came in 2.1% ahead of analyst predictions. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from Vesuvius' eleven analysts is for revenues of UK£1.60b in 2021, which would reflect a credible 3.4% increase on its sales over the past 12 months. Per-share earnings are expected to surge 43% to UK£0.33. Before this earnings report, the analysts had been forecasting revenues of UK£1.56b and earnings per share (EPS) of UK£0.31 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of UK£6.13, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 Vesuvius, with the most bullish analyst valuing it at UK£7.00 and the most bearish at UK£4.35 per share. 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. The analysts are definitely expecting Vesuvius' growth to accelerate, with the forecast 6.9% annualised growth to the end of 2021 ranking favourably alongside historical growth of 0.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Vesuvius to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Vesuvius' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Vesuvius going out to 2023, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for Vesuvius you should be aware of.
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