Analysts Have Just Cut Their Shearwater Group plc (LON:SWG) Revenue Estimates By 10%

Market forces rained on the parade of Shearwater Group plc (LON:SWG) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following this downgrade, Shearwater Group's two analysts are forecasting 2022 revenues to be UK£31m, approximately in line with the last 12 months. After this downgrade, the company is anticipated to report a loss of UK£0.011 in 2022, a sharp decline from a profit over the last year. Yet before this consensus update, the analysts had been forecasting revenues of UK£35m and losses of UK£0.011 per share in 2022. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.

See our latest analysis for Shearwater Group

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Shearwater Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 0.7% growth on an annualised basis. This is compared to a historical growth rate of 45% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Shearwater Group.

The Bottom Line

Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Shearwater Group's revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Shearwater Group going forwards.

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 2024, 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.

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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