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Serco Group plc (LON:SRP) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like a credible result overall - although revenues of UK£3.9b were what the analysts expected, Serco Group surprised by delivering a (statutory) profit of UK£0.11 per share, an impressive 28% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Serco Group after the latest results.
View our latest analysis for Serco Group
Following the latest results, Serco Group's eleven analysts are now forecasting revenues of UK£4.22b in 2021. This would be a decent 8.7% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to nosedive 22% to UK£0.085 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£4.22b and earnings per share (EPS) of UK£0.085 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.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at UK£1.72. 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 Serco Group analyst has a price target of UK£1.90 per share, while the most pessimistic values it at UK£1.55. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Serco Group is an easy business to forecast or the the analysts are all using similar assumptions.
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 clear from the latest estimates that Serco Group's rate of growth is expected to accelerate meaningfully, with the forecast 8.7% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 3.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Serco Group to grow faster than the wider industry.