Stock Analysis

Analysts Are Updating Their Ocado Group plc (LON:OCDO) Estimates After Its Yearly Results

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Ocado Group plc (LON:OCDO) defied analyst predictions to release its full-year results, which were ahead of market expectations. Revenues and losses per share were both better than expected, with revenues of UK£2.8b leading estimates by 2.9%. Statutory losses were smaller than the analystsexpected, coming in at UK£0.38 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Ocado Group

LSE:OCDO Earnings and Revenue Growth March 4th 2024

Taking into account the latest results, the most recent consensus for Ocado Group from twelve analysts is for revenues of UK£3.01b in 2024. If met, it would imply a satisfactory 6.4% increase on its revenue over the past 12 months. Losses are expected to increase substantially, hitting UK£0.44 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£3.03b and losses of UK£0.38 per share in 2024. So it's pretty clear the analysts have mixed opinions on Ocado Group even after this update; although they reconfirmed their revenue numbers, it came at the cost of a noticeable increase in per-share losses.

The consensus price target held steady at UK£8.09, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Ocado Group analyst has a price target of UK£29.00 per share, while the most pessimistic values it at UK£3.75. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Ocado Group's revenue growth is expected to slow, with the forecast 6.4% annualised growth rate until the end of 2024 being well below the historical 11% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.2% annually. So it's pretty clear that, while Ocado Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at UK£8.09, 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 Ocado Group 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 Ocado Group , and understanding it should be part of your investment process.

Valuation is complex, but we're helping make it simple.

Find out whether Ocado Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.