Results: AJ Bell plc Exceeded Expectations And The Consensus Has Updated Its Estimates

AJ Bell plc (LON:AJB) just released its yearly report and things are looking bullish. AJ Bell beat earnings, with revenues hitting UK£126m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 10%. 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.

Check out our latest analysis for AJ Bell

After the latest results, the six analysts covering AJ Bell are now predicting revenues of UK£130.0m in 2021. If met, this would reflect a satisfactory 3.3% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to sink 12% to UK£0.083 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£124.0m and earnings per share (EPS) of UK£0.083 in 2021. There doesn't appear to have been a major change in sentiment following the results, other than the small increase to revenue estimates.

It may not be a surprise to see thatthe analysts have reconfirmed their price target of UK£3.51, implying that the uplift in sales is not expected to greatly contribute to AJ Bell's valuation in the near term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values AJ Bell at UK£4.74 per share, while the most bearish prices it at UK£2.30. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that AJ Bell's revenue growth is expected to slow, with forecast 3.3% increase next year well below the historical 16%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.6% next year. Factoring in the forecast slowdown in growth, it seems obvious that AJ Bell is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. 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£3.51, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for AJ Bell going out to 2025, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for AJ Bell that you need to be mindful of.

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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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