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Shareholders might have noticed that Costain Group PLC (LON:COST) filed its annual result this time last week. The early response was not positive, with shares down 8.4% to UK£0.62 in the past week. Revenues of UK£978m came in 5.0% below estimates, but statutory losses were well contained with a per-share loss of UK£0.37 being some 18% smaller than what the analysts were predicting. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Costain Group
Following the latest results, Costain Group's four analysts are now forecasting revenues of UK£1.13b in 2021. This would be a decent 16% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Costain Group forecast to report a statutory profit of UK£0.074 per share. In the lead-up to this report, the analysts had been modelling revenues of UK£1.12b and earnings per share (EPS) of UK£0.075 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of UK£0.77, showing that the business is executing well and in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Costain Group analyst has a price target of UK£0.80 per share, while the most pessimistic values it at UK£0.70. This is a very narrow spread of estimates, implying either that Costain Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Costain Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 16% annualised growth until the end of 2021. If achieved, this would be a much better result than the 7.3% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 15% annually. So it looks like Costain Group is expected to grow at about the same rate as the wider industry.