Last week, you might have seen that TT Electronics plc (LON:TTG) released its half-year result to the market. The early response was not positive, with shares down 5.7% to UK£1.81 in the past week. Sales of UK£269m surpassed estimates by 6.0%, although statutory earnings per share missed badly, coming in 50% below expectations at UK£0.023 per share. Following the result, the 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from TT Electronics' seven analysts is for revenues of UK£561.9m in 2022, which would reflect a notable 10% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 102% to UK£0.13. Before this earnings report, the analysts had been forecasting revenues of UK£524.2m and earnings per share (EPS) of UK£0.14 in 2022. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a notable to revenue, the consensus also made a small dip in its earnings per share forecasts.
The consensus price target was unchanged at UK£2.81, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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 TT Electronics analyst has a price target of UK£3.60 per share, while the most pessimistic values it at UK£2.30. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await TT Electronics shareholders.
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 TT Electronics' rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 6.0% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect TT Electronics to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for TT Electronics going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for TT Electronics you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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