Headlam Group plc (LON:HEAD) Yearly Results Just Came Out: Here's What Analysts Are Forecasting For This Year

Headlam Group plc (LON:HEAD) shareholders are probably feeling a little disappointed, since its shares fell 3.4% to UK£3.13 in the week after its latest full-year results. The result was positive overall - although revenues of UK£664m were in line with what the analysts predicted, Headlam Group surprised by delivering a statutory profit of UK£0.40 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Headlam Group

Taking into account the latest results, Headlam Group's dual analysts currently expect revenues in 2023 to be UK£666.4m, approximately in line with the last 12 months. Statutory earnings per share are expected to plunge 29% to UK£0.30 in the same period. Before this earnings report, the analysts had been forecasting revenues of UK£664.6m and earnings per share (EPS) of UK£0.29 in 2023. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at UK£4.65, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues to the end of 2023. Historically, Headlam Group's sales have shrunk approximately 1.8% annually 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 revenue grow 12% per year. Although Headlam Group's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Headlam Group following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Headlam Group's revenues are expected to perform worse than the wider industry. The consensus price target held steady at UK£4.65, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Headlam Group. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Headlam Group (1 is a bit unpleasant!) that you need to be mindful of.

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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.