There's been a major selloff in Primero Group Limited (ASX:PGX) shares in the week since it released its half-year report, with the stock down 35% to AU$0.25. Sales greatly exceeded expectations, with revenues of AU$112m some 27% ahead of analyst forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.

See our latest analysis for Primero Group

After the latest results, the only analyst covering Primero Group are now predicting revenues of AU$207.7m in 2020. If met, this would reflect a reasonable 6.0% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be AU$0.037, roughly flat on the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of AU$199.7m and earnings per share (EPS) of AU$0.06 in 2020. While next year's revenue estimates increased, there was also a pretty serious reduction to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.

Analysts also cut Primero Group's price target 23% to AU$0.54, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in sales.

In addition, we can look to Primero Group's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect Primero Group's revenue growth will slow down substantially, with revenues next year expected to grow 6.0%, compared to a historical growth rate of 74% over the past year. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 7.5% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Primero Group.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Primero Group. Fortunately, analysts also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Primero Group going out as far as 2022, and you can see them free on our platform here.

You can also see our analysis of Primero Group's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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