Stock Analysis

Bridgepoint Group plc Just Beat EPS By 20%: Here's What Analysts Think Will Happen Next

LSE:BPT
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Bridgepoint Group plc (LON:BPT) defied analyst predictions to release its annual results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 3.1% to hit UK£306m. Bridgepoint Group also reported a statutory profit of UK£0.15, which was an impressive 20% above what the analysts had forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Bridgepoint Group

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LSE:BPT Earnings and Revenue Growth March 19th 2023

Taking into account the latest results, the current consensus from Bridgepoint Group's seven analysts is for revenues of UK£345.8m in 2023, which would reflect a decent 13% increase on its sales over the past 12 months. Per-share earnings are expected to climb 13% to UK£0.17. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£346.0m and earnings per share (EPS) of UK£0.18 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target fell 5.7% to UK£2.87, with the analysts clearly linking lower forecast earnings to the performance of the stock price. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Bridgepoint Group at UK£3.43 per share, while the most bearish prices it at UK£2.20. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Bridgepoint Group's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2023 being well below the historical 23% p.a. growth over the last three years. Compare this to the 204 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it looks like Bridgepoint Group is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Bridgepoint Group's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Bridgepoint Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Bridgepoint Group going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Bridgepoint Group (of which 1 is a bit unpleasant!) you should know about.

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

Find out whether Bridgepoint 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.