Analysts Have Just Cut Their Inchcape plc (LON:INCH) Revenue Estimates By 11%

Today is shaping up negative for Inchcape plc (LON:INCH) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from ten analysts covering Inchcape is for revenues of UK£11b in 2024, implying a definite 9.1% decline in sales compared to the last 12 months. Statutory earnings per share are presumed to step up 13% to UK£0.76. Prior to this update, the analysts had been forecasting revenues of UK£12b and earnings per share (EPS) of UK£0.82 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

Check out our latest analysis for Inchcape

Analysts made no major changes to their price target of UK£10.94, suggesting the downgrades are not expected to have a long-term impact on Inchcape's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Inchcape's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 9.1% by the end of 2024. This indicates a significant reduction from annual growth of 5.2% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 0.2% per year. So it's pretty clear that Inchcape's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Inchcape revenue is expected to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Inchcape after today.

Unfortunately, the earnings downgrade - if accurate - may also place pressure on Inchcape's mountain of debt, which could lead to some belt tightening for shareholders. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.

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