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

Investors in Bakkavor Group plc (LON:BAKK) had a good week, as its shares rose 6.3% to close at UK£1.01 following the release of its yearly results. The result was positive overall - although revenues of UK£2.2b were in line with what the analysts predicted, Bakkavor Group surprised by delivering a statutory profit of UK£0.092 per share, modestly greater than expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Bakkavor Group

Taking into account the latest results, Bakkavor Group's five analysts currently expect revenues in 2024 to be UK£2.23b, approximately in line with the last 12 months. Statutory earnings per share are forecast to reduce 6.1% to UK£0.088 in the same period. Before this earnings report, the analysts had been forecasting revenues of UK£2.23b and earnings per share (EPS) of UK£0.085 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at UK£1.13, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. The most optimistic Bakkavor Group analyst has a price target of UK£1.35 per share, while the most pessimistic values it at UK£1.00. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Bakkavor Group's revenue growth is expected to slow, with the forecast 1.2% annualised growth rate until the end of 2024 being well below the historical 4.0% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that Bakkavor Group is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Bakkavor Group's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at UK£1.13, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Bakkavor Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Bakkavor Group analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Bakkavor Group that you need to take into consideration.

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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.