One Harworth Group plc (LON:HWG) Analyst Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for Harworth Group plc (LON:HWG), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the current consensus from Harworth Group's solo analyst is for revenues of UK£96m in 2024 which - if met - would reflect a substantial 32% increase on its sales over the past 12 months. Statutory earnings per share are forecast to be UK£0.12, approximately in line with the last 12 months. Prior to this update, the analyst had been forecasting revenues of UK£111m and earnings per share (EPS) of UK£0.13 in 2024. Indeed, we can see that the analyst is a lot more bearish about Harworth Group's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Harworth Group

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. It's clear from the latest estimates that Harworth Group's rate of growth is expected to accelerate meaningfully, with the forecast 32% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 10% 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 2.7% annually. So it's clear with the acceleration in growth, Harworth Group is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Harworth Group. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Given the serious cut to this year's outlook, it's clear that the analyst has turned more bearish on Harworth Group, and we wouldn't blame shareholders for feeling a little more cautious themselves.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.