Investors in Record plc (LON:REC) had a good week, as its shares rose 9.9% to close at UK£0.38 following the release of its annual results. The result was positive overall – although revenues of UK£26m were in line with what the analysts predicted, Record surprised by delivering a statutory profit of UK£0.033 per share, modestly greater than expected. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Record
LSE:REC Past and Future Earnings June 23rd 2020
Taking into account the latest results, the three analysts covering Record provided consensus estimates of UK£22.7m revenue in 2021, which would reflect a not inconsiderable 11% decline on its sales over the past 12 months. Statutory earnings per share are forecast to plummet 42% to UK£0.019 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£22.4m and earnings per share (EPS) of UK£0.027 in 2021. So there’s definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
Althoughthe analysts have revised their earnings forecasts for next year, they’ve also lifted the consensus price target 14% to UK£0.49, suggesting the revised estimates are not indicative of a weaker long-term future for the business.
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 11%, a significant reduction from annual growth of 3.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 0.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Record is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Record. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn’t be too quick to come to a conclusion on Record. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Record going out to 2023, and you can see them free on our platform here..
And what about risks? Every company has them, and we’ve spotted 3 warning signs for Record you should know about.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.