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Shareholders might have noticed that G8 Education Limited (ASX:GEM) filed its half-yearly result this time last week. The early response was not positive, with shares down 7.3% to AU$1.28 in the past week. It was not a great result overall. While revenues of AU$483m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 18% to hit AU$0.025 per share. 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.
See our latest analysis for G8 Education
Taking into account the latest results, G8 Education's six analysts currently expect revenues in 2024 to be AU$1.02b, approximately in line with the last 12 months. Per-share earnings are expected to step up 15% to AU$0.087. Before this earnings report, the analysts had been forecasting revenues of AU$1.02b and earnings per share (EPS) of AU$0.089 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
The consensus price target held steady at AU$1.32, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic G8 Education analyst has a price target of AU$1.70 per share, while the most pessimistic values it at AU$0.56. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes 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. We would highlight that G8 Education's revenue growth is expected to slow, with the forecast 1.4% annualised growth rate until the end of 2024 being well below the historical 3.2% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.8% annually. Factoring in the forecast slowdown in growth, it seems obvious that G8 Education is also expected to grow slower than other industry participants.