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

By
Simply Wall St
Published
July 21, 2020
OM:EVO

Shareholders might have noticed that Evolution Gaming Group AB (publ) (STO:EVO) filed its quarterly result this time last week. The early response was not positive, with shares down 7.2% to kr631 in the past week. Evolution Gaming Group reported €128m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of €0.38 beat expectations, being 9.0% higher than what the analysts expected. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Evolution Gaming Group

earnings-and-revenue-growth
OM:EVO Earnings and Revenue Growth July 22nd 2020

After the latest results, the five analysts covering Evolution Gaming Group are now predicting revenues of €519.0m in 2020. If met, this would reflect a solid 17% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 22% to €1.42. Before this earnings report, the analysts had been forecasting revenues of €515.7m and earnings per share (EPS) of €1.35 in 2020. So the consensus seems to have become somewhat more optimistic on Evolution Gaming Group's earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 10% to €68.13. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Evolution Gaming Group analyst has a price target of €742 per share, while the most pessimistic values it at €635. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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 pretty clear that there is an expectation that Evolution Gaming Group's revenue growth will slow down substantially, with revenues next year expected to grow 17%, compared to a historical growth rate of 36% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 19% next year. So it's pretty clear that, while Evolution Gaming Group's revenue growth is expected to slow, it's expected to grow roughly in line with the 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. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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.

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 Evolution Gaming Group analysts - going out to 2022, and you can see them free on our platform here.

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

Promoted
If you’re looking to trade Evolution Gaming Group, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.


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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.


Simply Wall St character - Warren

Simply Wall St

Simply Wall St is a financial technology startup focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of equity analysts with a public, market-beating track record. Learn more about the team behind Simply Wall St.