Results: Civmec Limited Beat Earnings Expectations And Analysts Now Have New Forecasts

Civmec Limited (SGX:P9D) defied analyst predictions to release its full-year results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 4.2% to hit AU$809m. Civmec reported statutory earnings per share (EPS) AU$0.10, which was a notable 12% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Civmec after the latest results.

Check out our latest analysis for Civmec

Following the latest results, Civmec's three analysts are now forecasting revenues of AU$831.2m in 2023. This would be a reasonable 2.7% improvement in sales compared to the last 12 months. Statutory per share are forecast to be AU$0.10, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$848.3m and earnings per share (EPS) of AU$0.087 in 2023. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the nice gain to to the earnings per share numbers.

There's been no real change to the average price target of S$0.96, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Civmec, with the most bullish analyst valuing it at S$1.03 and the most bearish at S$0.86 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Civmec is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Civmec's revenue growth is expected to slow, with the forecast 2.7% annualised growth rate until the end of 2023 being well below the historical 8.7% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it seems obvious that Civmec is also expected to grow slower than other industry participants.

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 Civmec following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. With that said, earnings are more important to the long-term value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 estimates - from multiple Civmec analysts - going out to 2025, and you can see them free on our platform here.

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

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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.