Medica Group Plc Just Missed Earnings - But Analysts Have Updated Their Models

Last week saw the newest yearly earnings release from Medica Group Plc (LON:MGP), an important milestone in the company's journey to build a stronger business. Statutory earnings per share fell badly short of expectations, coming in at UK£0.012, some 53% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at UK£37m. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Medica Group

Following the latest results, Medica Group's five analysts are now forecasting revenues of UK£60.3m in 2021. This would be a huge 64% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 305% to UK£0.049. In the lead-up to this report, the analysts had been modelling revenues of UK£59.2m and earnings per share (EPS) of UK£0.045 in 2021. So the consensus seems to have become somewhat more optimistic on Medica Group's earnings potential following these results.

There's been no major changes to the consensus price target of UK£1.69, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. There are some variant perceptions on Medica Group, with the most bullish analyst valuing it at UK£2.20 and the most bearish at UK£0.83 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Medica Group's growth to accelerate, with the forecast 64% annualised growth to the end of 2021 ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.0% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Medica Group is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Medica Group's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 Medica Group going out to 2025, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 4 warning signs for Medica Group you should be aware of.

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