Growth Investors: Industry Analysts Just Upgraded Their K3 Capital Group PLC (LON:K3C) Revenue Forecasts By 14%
Shareholders in K3 Capital Group PLC (LON:K3C) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that K3 Capital Group will make substantially more sales than they'd previously expected. K3 Capital Group has also found favour with investors, with the stock up an impressive 13% to UK£3.38 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the most recent consensus for K3 Capital Group from its two analysts is for revenues of UK£45m in 2021 which, if met, would be a sizeable 81% increase on its sales over the past 12 months. Statutory earnings per share are forecast to be UK£0.09, approximately in line with the last 12 months. Prior to this update, the analysts had been forecasting revenues of UK£39m and earnings per share (EPS) of UK£0.084 in 2021. The forecasts seem more optimistic now, with a solid increase in revenue and a small lift in earnings per share estimates.
View our latest analysis for K3 Capital Group
With these upgrades, we're not surprised to see that the analysts have lifted their price target 7.8% to UK£3.53 per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on K3 Capital Group, with the most bullish analyst valuing it at UK£3.31 and the most bearish at UK£3.23 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting K3 Capital Group is an easy business to forecast or the underlying assumptions are obvious.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the K3 Capital Group's past performance and to peers in the same industry. The analysts are definitely expecting K3 Capital Group's growth to accelerate, with the forecast 81% annualised growth to the end of 2021 ranking favourably alongside historical growth of 12% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect K3 Capital Group to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at K3 Capital Group.
Analysts are clearly in love with K3 Capital Group at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as major dilution from new stock issuance in the past year. You can learn more, and discover the 4 other risks we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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. 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.
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