PGG Wrightson Limited (NZSE:PGW) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were NZ$848m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at NZ$0.30, an impressive 38% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, PGG Wrightson's twin analysts currently expect revenues in 2022 to be NZ$856.3m, approximately in line with the last 12 months. Statutory earnings per share are forecast to plunge 35% to NZ$0.20 in the same period. In the lead-up to this report, the analysts had been modelling revenues of NZ$849.4m and earnings per share (EPS) of NZ$0.23 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
It might be a surprise to learn that the consensus price target was broadly unchanged at NZ$3.03, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation.
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 also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues to the end of 2022. Historically, PGG Wrightson's sales have shrunk approximately 8.9% annually over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.7% per year. So it's pretty clear that, although revenues are improving, PGG Wrightson is still expected to grow slower than the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for PGG Wrightson. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at NZ$3.03, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for PGG Wrightson going out as far as 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for PGG Wrightson (1 is a bit concerning!) that we have uncovered.
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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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