Earnings Beat: Evolution Gaming Group AB (publ) Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

October 24, 2020
  •  Updated
September 25, 2022
OM:EVO
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Evolution Gaming Group AB (publ) (STO:EVO) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat expectations with revenues of €140m arriving 2.7% ahead of forecasts. Statutory earnings per share (EPS) were €0.44, 9.7% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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OM:EVO Earnings and Revenue Growth October 25th 2020

Following the latest results, Evolution Gaming Group's six analysts are now forecasting revenues of €728.8m in 2021. This would be a sizeable 49% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 45% to €2.01. In the lead-up to this report, the analysts had been modelling revenues of €712.9m and earnings per share (EPS) of €1.91 in 2021. 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 6.4% to €74.15per 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. There are some variant perceptions on Evolution Gaming Group, with the most bullish analyst valuing it at €811 and the most bearish at €706 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Evolution Gaming Group's past performance and to peers in the same industry. The analysts are definitely expecting Evolution Gaming Group's growth to accelerate, with the forecast 49% growth ranking favourably alongside historical growth of 36% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Evolution Gaming Group to grow faster than the wider 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 Evolution Gaming Group following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected 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.

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 forecasts for Evolution Gaming Group going out to 2023, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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