Results: 3i Group plc Beat Earnings Expectations And Analysts Now Have New Forecasts

Investors in 3i Group plc (LON:III) had a good week, as its shares rose 3.1% to close at UK£18.29 following the release of its full-year results. It looks like a credible result overall - although revenues of UK£4.7b were in line with what the analysts predicted, 3i Group surprised by delivering a statutory profit of UK£4.74 per share, a notable 15% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for 3i Group

Taking into account the latest results, the current consensus, from the six analysts covering 3i Group, is for revenues of UK£3.16b in 2024, which would reflect a concerning 33% reduction in 3i Group's sales over the past 12 months. Statutory earnings per share are expected to tumble 48% to UK£2.49 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£3.10b and earnings per share (EPS) of UK£2.48 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at UK£20.57. 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 3i Group at UK£23.90 per share, while the most bearish prices it at UK£14.72. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the 3i Group's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 33% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 31% 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 - 3i Group is expected to lag the wider industry.

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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that 3i Group's revenues are expected to perform worse than the wider industry. The consensus price target held steady at UK£20.57, with the latest estimates not enough to have an impact on their price targets.

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 3i Group going out to 2026, and you can see them free on our platform here..

Plus, you should also learn about the 3 warning signs we've spotted with 3i Group (including 2 which don't sit too well with us) .

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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.