Oceana Group Limited (JSE:OCE) Analysts Just Cut Their EPS Forecasts Substantially

The latest analyst coverage could presage a bad day for Oceana Group Limited (JSE:OCE), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Oceana Group from its twin analysts is for revenues of R7.6b in 2022 which, if met, would be an okay 4.8% increase on its sales over the past 12 months. Per-share earnings are expected to expand 15% to R4.64. Prior to this update, the analysts had been forecasting revenues of R8.5b and earnings per share (EPS) of R5.73 in 2022. Indeed, we can see that the analysts are a lot more bearish about Oceana Group's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Oceana Group

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Oceana Group's rate of growth is expected to accelerate meaningfully, with the forecast 9.9% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 1.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Oceana Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Oceana Group, and we wouldn't blame shareholders for feeling a little more cautious themselves.

That said, the analysts might have good reason to be negative on Oceana Group, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 4 other risks we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.