Wincanton plc (LON:WIN) Analysts Are Pretty Bullish On The Stock After Recent Results

By
Simply Wall St
Published
May 21, 2021
LSE:WIN
Source: Shutterstock

It's been a good week for Wincanton plc (LON:WIN) shareholders, because the company has just released its latest annual results, and the shares gained 6.3% to UK£4.54. The result was positive overall - although revenues of UK£1.2b were in line with what the analysts predicted, Wincanton surprised by delivering a statutory profit of UK£0.33 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Wincanton

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LSE:WIN Earnings and Revenue Growth May 22nd 2021

Taking into account the latest results, the consensus forecast from Wincanton's five analysts is for revenues of UK£1.27b in 2022, which would reflect a credible 4.3% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 5.5% to UK£0.35. Before this earnings report, the analysts had been forecasting revenues of UK£1.21b and earnings per share (EPS) of UK£0.33 in 2022. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 9.7% to UK£5.07per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Wincanton at UK£5.50 per share, while the most bearish prices it at UK£4.70. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Wincanton is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Wincanton's past performance and to peers in the same industry. It's clear from the latest estimates that Wincanton's rate of growth is expected to accelerate meaningfully, with the forecast 4.3% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 1.4% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Wincanton is expected to grow much faster than its 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 Wincanton following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 estimates - from multiple Wincanton analysts - going out to 2024, 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 Wincanton that you should be aware of.

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