Shareholders of Ramsdens Holdings PLC (LON:RFX) will be pleased this week, given that the stock price is up 15% to UK£1.51 following its latest annual results. Ramsdens Holdings beat revenue expectations by 5.6%, recording sales of UK£60m. Statutory earnings per share (EPS) came in at UK£0.21, some 5.0% short of analyst estimates. Following the result, the analyst has updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analyst is expecting for next year.

Check out our latest analysis for Ramsdens Holdings

After the latest results, the consensus from Ramsdens Holdings' one analyst is for revenues of UK£51.4m in 2021, which would reflect a chunky 14% decline in sales compared to the last year of performance. Statutory earnings per share are forecast to decrease 2.2% to UK£0.21 in the same period. Prior to the latest earnings, the analyst was forecasting revenues of UK£48.8m in 2021, and did not provide an earnings per share estimate. So we can see that while the consensus made a modest lift to revenue estimates, it also began providing earnings per share estimates, suggesting Ramsdens Holdings' earnings have become more important to the investment case after these results.

Despite these upgrades,the analyst has not made any major changes to their price target of UK£2.31, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 14%, a significant reduction from annual growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ramsdens Holdings is expected to lag the wider industry.

The Bottom Line

Probably the biggest thing to take away from these latest forecasts is that brokers are definitely optimistic on the business, given the forecast for profitability next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at UK£2.31, with the latest estimates not enough to have an impact on their price target.

With that in mind, we wouldn't be too quick to come to a conclusion on Ramsdens Holdings. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Ramsdens Holdings going out as far as 2022, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for Ramsdens Holdings you should be aware of.

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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. Thank you for reading.