Aptitude Software Group plc Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Aptitude Software Group plc (LON:APTD) released its annual result to the market. The early response was not positive, with shares down 2.2% to UK£6.12 in the past week. It looks like a credible result overall - although revenues of UK£57m were in line with what the analysts predicted, Aptitude Software Group surprised by delivering a statutory profit of UK£0.12 per share, a notable 18% above expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Aptitude Software Group

Taking into account the latest results, the current consensus, from the three analysts covering Aptitude Software Group, is for revenues of UK£55.8m in 2021, which would reflect a measurable 2.6% reduction in Aptitude Software Group's sales over the past 12 months. Statutory earnings per share are forecast to drop 14% to UK£0.11 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£55.8m and earnings per share (EPS) of UK£0.11 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 6.5% to UK£7.37despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Aptitude Software Group's earnings by assigning a price premium. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Aptitude Software Group at UK£7.50 per share, while the most bearish prices it at UK£7.25. This is a very narrow spread of estimates, implying either that Aptitude Software Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that sales are expected to reverse, with a forecast 2.6% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 9.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Aptitude Software Group is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Aptitude Software Group's revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Aptitude Software Group going out to 2023, and you can see them free on our platform here..

Plus, you should also learn about the 1 warning sign we've spotted with Aptitude Software Group .

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This article by Simply Wall St is general in nature. 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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