Last week, you might have seen that GCM Grosvenor Inc. (NASDAQ:GCMG) released its quarterly result to the market. The early response was not positive, with shares down 9.0% to US$12.20 in the past week. The results don't look great, especially considering that statutory losses grew 768% toUS$0.05 per share. Revenues of US$103m did beat expectations by 3.9%, but it looks like a bit of a cold comfort. Earnings are an important time for investors, as they can track a company's performance, look at what the 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 the analysts are expecting for next year.
Following the latest results, GCM Grosvenor's two analysts are now forecasting revenues of US$460.1m in 2021. This would be a satisfactory 2.3% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plunge 30% to US$0.41 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$451.3m and earnings per share (EPS) of US$0.38 in 2021. So the consensus seems to have become somewhat more optimistic on GCM Grosvenor's earnings potential following these results.
There's been no major changes to the consensus price target of US$14.50, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that GCM Grosvenor's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 3.1% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past year. Compare this to the 769 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 2.7% per year. So it's pretty clear that, while GCM Grosvenor's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards GCM Grosvenor following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$14.50, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on GCM Grosvenor. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
Before you take the next step you should know about the 2 warning signs for GCM Grosvenor that we have uncovered.
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