Premier Foods plc Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a pretty great week for Premier Foods plc (LON:PFD) shareholders, with its shares surging 11% to UK£1.19 in the week since its latest full-year results. The result was positive overall - although revenues of UK£901m were in line with what the analysts predicted, Premier Foods surprised by delivering a statutory profit of UK£0.088 per share, modestly greater than expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Premier Foods

Taking into account the latest results, the consensus forecast from Premier Foods' five analysts is for revenues of UK£928.7m in 2023, which would reflect a reasonable 3.1% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 3.2% to UK£0.093. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£926.4m and earnings per share (EPS) of UK£0.093 in 2023. 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.

The consensus price target rose 5.6% to UK£1.39despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Premier Foods' earnings by assigning a price premium. 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. Currently, the most bullish analyst values Premier Foods at UK£1.45 per share, while the most bearish prices it at UK£1.20. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Premier Foods is an easy business to forecast or the the analysts are all using similar assumptions.

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. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 3.1% growth on an annualised basis. That is in line with its 3.5% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.4% per year. So it's pretty clear that Premier Foods is expected to grow slower than similar companies in the same 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 Premier Foods' revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Premier Foods going out to 2025, and you can see them free on our platform here.

It might also be worth considering whether Premier Foods' 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.