EBOS Group Limited Just Released Its Half-Year Results And Analysts Are Updating Their Estimates
Investors in EBOS Group Limited (NZSE:EBO) had a good week, as its shares rose 6.1% to close at NZ$25.00 following the release of its interim results. Results overall were respectable, with statutory earnings of AU$0.91 per share roughly in line with what analysts had forecast. Revenues of AU$4.4b came in 4.2% ahead of analyst predictions. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Check out our latest analysis for EBOS Group
Following the latest results, EBOS Group's six analysts are now forecasting revenues of AU$8.66b in 2020. This would be a notable 11% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to increase 5.7% to AU$1.02. Before this earnings report, analysts had been forecasting revenues of AU$8.01b and earnings per share (EPS) of AU$0.99 in 2020. So there seems to have been a moderate uplift in analyst sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Despite these upgrades, analysts have not made any major changes to their price target of NZ$23.84, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on EBOS Group, with the most bullish analyst valuing it at NZ$26.48 and the most bearish at NZ$19.80 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting EBOS Group's growth to accelerate, with the forecast 11% growth ranking favourably alongside historical growth of 5.2% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 9.9% next year. EBOS Group is expected to grow at about the same rate as its market, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards EBOS Group following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that EBOS Group will grow in line with the overall market. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on EBOS Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple EBOS Group analysts - going out to 2024, and you can see them free on our platform here.
You can also see whether EBOS Group is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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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