Earnings Update: SSP Group plc (LON:SSPG) Just Reported And Analysts Are Trimming Their Forecasts

SSP Group plc (LON:SSPG) shareholders are probably feeling a little disappointed, since its shares fell 3.1% to UK£3.12 in the week after its latest full-year results. It was a pretty bad result overall; while revenues were in line with expectations at UK£1.4b, statutory losses exploded to UK£0.76 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for SSP Group

Following last week's earnings report, SSP Group's 15 analysts are forecasting 2021 revenues to be UK£1.42b, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 61% to UK£0.30. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£1.72b and losses of UK£0.13 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

There was no major change to the consensus price target of UK£3.59, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 SSP Group analyst has a price target of UK£5.75 per share, while the most pessimistic values it at UK£2.40. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.9%, a significant reduction from annual growth of 5.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SSP Group is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.

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

It is also worth noting that we have found 3 warning signs for SSP Group (1 can't be ignored!) that you need to take into consideration.

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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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