RPS Group plc (LON:RPS) Analysts Are Pretty Bullish On The Stock After Recent Results

Shareholders might have noticed that RPS Group plc (LON:RPS) filed its yearly result this time last week. The early response was not positive, with shares down 8.7% to UK£0.92 in the past week. The statutory results were not great - while revenues of UK£457m were in line with expectations,RPS Group lost UK£0.13 a share in the process. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on RPS Group after the latest results.

Check out our latest analysis for RPS Group

Following the latest results, RPS Group's four analysts are now forecasting revenues of UK£483.5m in 2021. This would be a modest 5.7% improvement in sales compared to the last 12 months. Earnings are expected to improve, with RPS Group forecast to report a statutory profit of UK£0.031 per share. In the lead-up to this report, the analysts had been modelling revenues of UK£498.8m and earnings per share (EPS) of UK£0.029 in 2021. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

The average price target rose 9.1% to UK£1.10, with the analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates. 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. Currently, the most bullish analyst values RPS Group at UK£1.30 per share, while the most bearish prices it at UK£1.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing stands out from these estimates, which is that RPS Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.7% annualised growth until the end of 2021. If achieved, this would be a much better result than the 1.1% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.7% per year. So it looks like RPS Group is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards RPS Group following these results. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Yet - earnings are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 RPS Group going out to 2025, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for RPS Group you should know about.

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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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