Analysts' Revenue Estimates For MJ Gleeson plc (LON:GLE) Are Surging Higher

MJ Gleeson plc (LON:GLE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. The stock price has risen 9.2% to UK£7.62 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?

Following the upgrade, the latest consensus from MJ Gleeson's six analysts is for revenues of UK£265m in 2021, which would reflect a substantial 80% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 375% to UK£0.41. Previously, the analysts had been modelling revenues of UK£237m and earnings per share (EPS) of UK£0.35 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for MJ Gleeson

It will come as no surprise to learn that the analysts have increased their price target for MJ Gleeson 7.8% to UK£8.10 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic MJ Gleeson analyst has a price target of UK£9.50 per share, while the most pessimistic values it at UK£5.90. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the MJ Gleeson's past performance and to peers in the same industry. The analysts are definitely expecting MJ Gleeson's growth to accelerate, with the forecast 80% growth ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect MJ Gleeson to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at MJ Gleeson.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on MJ Gleeson that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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