Kerry Group plc Just Recorded A 5.7% Revenue Beat: Here's What Analysts Think

Investors in Kerry Group plc (LON:KYGA) had a good week, as its shares rose 6.9% to close at €106 following the release of its half-yearly results. It was a workmanlike result, with revenues of €4.1b coming in 5.7% ahead of expectations, and statutory earnings per share of €4.30, in line with analyst appraisals. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Kerry Group

Taking into account the latest results, the consensus forecast from Kerry Group's 13 analysts is for revenues of €8.33b in 2022, which would reflect a modest 6.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to decrease 6.8% to €4.02 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €8.11b and earnings per share (EPS) of €3.44 in 2022. So it seems there's been a definite increase in optimism about Kerry Group's future following the latest results, with a decent improvement in the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of €131, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Kerry Group analyst has a price target of €150 per share, while the most pessimistic values it at €109. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kerry Group's past performance and to peers in the same industry. The analysts are definitely expecting Kerry Group's growth to accelerate, with the forecast 13% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Kerry Group to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Kerry Group following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at €131, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Kerry Group going out to 2024, and you can see them free on our platform here.

It might also be worth considering whether Kerry Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.