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Step One Clothing Limited (ASX:STP) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasts think of the company following this report. Step One Clothing reported in line with analyst predictions, delivering revenues of AU$85m and statutory earnings per share of AU$0.067, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Step One Clothing
After the latest results, the lone analyst covering Step One Clothing are now predicting revenues of AU$97.5m in 2025. If met, this would reflect a solid 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 14% to AU$0.077. Before this earnings report, the analyst had been forecasting revenues of AU$94.1m and earnings per share (EPS) of AU$0.074 in 2025. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Despite these upgrades,the analyst has not made any major changes to their price target of AU$2.25, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Step One Clothing's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.7% per year. Even after the forecast slowdown in growth, it seems obvious that Step One Clothing is also expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Step One Clothing's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at AU$2.25, with the latest estimates not enough to have an impact on their price target.