Reach plc (LON:RCH) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was an okay report, and revenues came in at UK£703m, approximately in line with analyst estimates leading up to the results announcement. 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.
Taking into account the latest results, the current consensus, from the dual analysts covering Reach, is for revenues of UK£659.6m in 2020, which would reflect a small 6.1% reduction in Reach's sales over the past 12 months. Before this earnings result, analysts had predicted UK£657.7m revenue in 2020, although there was no accompanying EPS estimate. It looks like the latest results have met analyst expectations and confirmed that the business is performing in line with expectations, given there's been no real changes in the new revenue estimates.
The average analyst price target rose 21% to UK£1.95, with analysts clearly having become more optimistic about Reach's prospects following these results.
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. We would highlight that sales are expected to reverse, with the forecast 6.1% revenue decline a notable change from historical growth of 3.1% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 3.2% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Reach to grow slower than the wider market.
The Bottom Line
The most important thing to take away from these updates is that analysts are definitely optimistic on the business, given that they've begun forecasting positive per-share earnings for next year. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
At least one of Reach's dual analysts has provided estimates out to 2021, which can be seen for 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.
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