The Consensus EPS Estimates For ASA International Group PLC (LON:ASAI) Just Fell Dramatically

The analysts covering ASA International Group PLC (LON:ASAI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, ASA International Group's four analysts currently expect revenues in 2020 to be US$114m, approximately in line with the last 12 months. Statutory earnings per share are anticipated to tumble 42% to US$0.095 in the same period. Prior to this update, the analysts had been forecasting revenues of US$127m and earnings per share (EPS) of US$0.16 in 2020. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for ASA International Group

Analysts made no major changes to their price target of UK£2.74, suggesting the downgrades are not expected to have a long-term impact on ASA International Group's valuation. 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 ASA International Group at UK£3.01 per share, while the most bearish prices it at UK£2.18. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast for next year. That would be a definite improvement, given that the past year have seen sales shrink year annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 22% per year. So it's pretty clear that, although revenues are improving, ASA International Group is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of ASA International Group.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with ASA International Group's business, like its declining profit margins. Learn more, and discover the 1 other concern we've identified, for free 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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