Analysts Just Slashed Their Watkin Jones Plc (LON:WJG) EPS Numbers

One thing we could say about the analysts on Watkin Jones Plc (LON:WJG) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Watkin Jones from its six analysts is for revenues of UK£480m in 2023 which, if met, would be a substantial 30% increase on its sales over the past 12 months. Statutory earnings per share are expected to be UK£0.10, roughly flat on the last 12 months. Before this latest update, the analysts had been forecasting revenues of UK£547m and earnings per share (EPS) of UK£0.14 in 2023. Indeed, we can see that the analysts are a lot more bearish about Watkin Jones' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Watkin Jones

The consensus price target fell 6.1% to UK£1.63, with the weaker earnings outlook clearly leading analyst valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Watkin Jones, with the most bullish analyst valuing it at UK£2.47 and the most bearish at UK£0.93 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Watkin Jones' rate of growth is expected to accelerate meaningfully, with the forecast 70% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 3.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 2.4% annually. So it's clear with the acceleration in growth, Watkin Jones is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Watkin Jones. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Watkin Jones.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Watkin Jones going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.