Mears Group plc Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Investors in Mears Group plc (LON:MER) had a good week, as its shares rose 6.5% to close at UK£2.22 following the release of its full-year results. Mears Group reported UK£960m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of UK£0.25 beat expectations, being 7.7% higher than what the analysts expected. 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 Mears Group

Taking into account the latest results, the three analysts covering Mears Group provided consensus estimates of UK£908.4m revenue in 2023, which would reflect a perceptible 5.3% decline on its sales over the past 12 months. Statutory earnings per share are forecast to reduce 7.3% to UK£0.23 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£860.0m and earnings per share (EPS) of UK£0.21 in 2023. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice gain to earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of UK£2.74, 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. Currently, the most bullish analyst values Mears Group at UK£3.08 per share, while the most bearish prices it at UK£2.39. This is a very narrow spread of estimates, implying either that Mears Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 5.3% by the end of 2023. This indicates a significant reduction from annual growth of 1.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.4% per year. It's pretty clear that Mears Group's revenues are expected to perform substantially worse 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 Mears Group's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at UK£2.74, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Mears Group going out to 2025, 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 Mears Group (1 doesn't sit too well with us!) that we have uncovered.

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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.