SECOS Group Limited Just Missed EPS By 90%: Here's What Analysts Think Will Happen Next

Simply Wall St
·3 min read

It's been a good week for SECOS Group Limited (ASX:SES) shareholders, because the company has just released its latest half-yearly results, and the shares gained 3.3% to AU$0.32. Results overall were not great, with earnings of AU$0.0001 per share falling drastically short of analyst expectations. Meanwhile revenues hit AU$14m and were slightly better than forecasts. 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.

View our latest analysis for SECOS Group

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Following the latest results, SECOS Group's dual analysts are now forecasting revenues of AU$31.4m in 2021. This would be a huge 29% improvement in sales compared to the last 12 months. SECOS Group is also expected to turn profitable, with statutory earnings of AU$0.001 per share. In the lead-up to this report, the analysts had been modelling revenues of AU$29.9m and break-even in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a earnings per share in particular.

It will come as no surprise to learn that the analysts have increased their price target for SECOS Group 30% to AU$0.28on the back of these upgrades.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting SECOS Group's growth to accelerate, with the forecast 29% growth ranking favourably alongside historical growth of 1.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.0% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that SECOS Group is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around SECOS Group's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. 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 SECOS Group that we have uncovered.

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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