Shareholders in Salcef Group S.p.A. (BIT:SCF) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Salcef Group will make substantially more sales than they'd previously expected.
Following the upgrade, the current consensus from Salcef Group's dual analysts is for revenues of €373m in 2021 which - if met - would reflect a solid 14% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 110% to €1.19. Previously, the analysts had been modelling revenues of €338m and earnings per share (EPS) of €1.14 in 2021. The forecasts seem more optimistic now, with a solid increase in revenue and a small increase to earnings per share estimates.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of €13.95, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Salcef Group at €13.80 per share, while the most bearish prices it at €13.40. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Salcef Group is an easy business to forecast or the underlying assumptions are obvious.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Salcef Group's rate of growth is expected to accelerate meaningfully, with the forecast 14% revenue growth noticeably faster than its historical growth of 8.5% 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 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Salcef Group is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Salcef Group.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
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