Greencore Group plc Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next

As you might know, Greencore Group plc (LON:GNC) recently reported its yearly numbers. Revenues came in well ahead of expectations at UK£1.5b, although statutory earnings per share fell badly short. Greencore Group reported a loss of UK£0.026 per share, whereas the analysts had previously expected a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Greencore Group

Taking into account the latest results, the current consensus, from the eight analysts covering Greencore Group, is for revenues of UK£1.34b in 2021, which would reflect an uneasy 8.2% reduction in Greencore Group's sales over the past 12 months. Statutory earnings per share are forecast to plummet 28% to UK£0.11 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£1.34b and earnings per share (EPS) of UK£0.11 in 2021. 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.

With no major changes to earnings forecasts, the consensus price target fell 6.1% to UK£1.34, suggesting that the analysts might have previously been hoping for an earnings upgrade. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Greencore Group analyst has a price target of UK£2.00 per share, while the most pessimistic values it at UK£1.00. 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.

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. One more thing stood out to us about these estimates, and it's the idea that Greencore Group'sdecline is expected to accelerate, with revenues forecast to fall 8.2% next year, topping off a historical decline of 0.5% a year over the past year. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 5.1% next year. So while a broad number of companies are forecast to decline, unfortunately Greencore Group is expected to see its sales affected worse than other companies in the 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Greencore Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Greencore Group analysts - going out to 2023, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Greencore Group you should know about.

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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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