Earnings Miss: IVE Group Limited Missed EPS By 9.1% And Analysts Are Revising Their Forecasts
IVE Group Limited (ASX:IGL) just released its latest half-year report and things are not looking great. IVE Group missed analyst estimates, with revenues of AU$360m and statutory earnings per share (EPS) of AU$0.21, missing by 6.0% and 9.1% respectively. Following the result, analysts have 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for IVE Group
After the latest results, the three analysts covering IVE Group are now predicting revenues of AU$769.4m in 2020. If met, this would reflect a decent 8.6% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be AU$0.17, roughly flat on the last 12 months. Before this earnings report, analysts had been forecasting revenues of AU$780.4m and earnings per share (EPS) of AU$0.21 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the substantial drop in new EPS forecasts.
It might be a surprise to learn that the consensus price target fell 11% to AU$2.30, with analysts clearly linking lower forecast earnings to the performance of the stock price. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic IVE Group analyst has a price target of AU$2.44 per share, while the most pessimistic values it at AU$2.20. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that analysts expect IVE Group's revenue growth will slow down substantially, with revenues next year expected to grow 8.6%, compared to a historical growth rate of 17% over the past three years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 3.1% next year. So it's pretty clear that, while IVE Group's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that IVE Group's revenues are expected to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of IVE Group's future valuation.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for IVE Group going out to 2023, and you can see them free on our platform here..
It might also be worth considering whether IVE Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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