IWG plc (LON:IWG) Just Released Its Annual Earnings: Here's What Analysts Think

Last week, you might have seen that IWG plc (LON:IWG) released its yearly result to the market. The early response was not positive, with shares down 7.5% to UK£3.49 in the past week. Revenues were in line with expectations, at UK£2.5b, while statutory losses ballooned to UK£0.68 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on IWG after the latest results.

Check out our latest analysis for IWG

Taking into account the latest results, IWG's eight analysts currently expect revenues in 2021 to be UK£2.48b, approximately in line with the last 12 months. IWG is also expected to turn profitable, with statutory earnings of UK£0.012 per share. In the lead-up to this report, the analysts had been modelling revenues of UK£2.50b and earnings per share (EPS) of UK£0.017 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at UK£3.82, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on IWG, with the most bullish analyst valuing it at UK£4.50 and the most bearish at UK£3.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 0.01% by the end of 2021. This indicates a significant reduction from annual growth of 5.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - IWG is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for IWG. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that IWG's revenues are expected to perform worse than the wider industry. The consensus price target held steady at UK£3.82, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for IWG going out to 2023, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for IWG (1 is a bit unpleasant) you should be aware of.

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