Eckoh plc Just Missed EPS By 55%: Here's What Analysts Think Will Happen Next
It's been a good week for Eckoh plc (LON:ECK) shareholders, because the company has just released its latest half-year results, and the shares gained 8.8% to UK£0.53. Earnings per share disappointed, coming in -55% short of expectations, at UK£0.0036. Fortunately revenue performance was a lot stronger, with revenues of UK£18m arriving 11% ahead of predictions. 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. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Eckoh after the latest results.
Check out our latest analysis for Eckoh
Taking into account the latest results, Eckoh's three analysts currently expect revenues in 2020 to be UK£33.4m, approximately in line with the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of UK£33.4m and earnings per share (EPS) of UK£0.023 in 2020. So we can see that while the consensus made no real change to its revenue estimates, it also no longer provides an earnings per share estimate, suggesting that revenues are what the market is focusing on after the latest results.
The average analyst price target rose 11% to UK£0.57, with analysts clearly having become more optimistic about Eckoh's prospects following these results. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Eckoh at UK£0.60 per share, while the most bearish prices it at UK£0.55. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Eckoh's performance in recent years. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.7% a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 11% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Eckoh to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Eckoh's revenues are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
We have estimates for Eckoh from its three analysts , and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months 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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