Industry Analysts Just Made A Captivating Upgrade To Their Steadfast Group Limited (ASX:SDF) Revenue Forecasts

Simply Wall St
·3 min read

Celebrations may be in order for Steadfast Group Limited (ASX:SDF) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The market seems to be pricing in some improvement in the business too, with the stock up 6.4% over the past week, closing at AU$4.99. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the upgrade, the current consensus from Steadfast Group's six analysts is for revenues of AU$1.0b in 2022 which - if met - would reflect a decent 10% increase on its sales over the past 12 months. Per-share earnings are expected to increase 4.7% to AU$0.17. Prior to this update, the analysts had been forecasting revenues of AU$946m and earnings per share (EPS) of AU$0.17 in 2022. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

See our latest analysis for Steadfast Group

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earnings-and-revenue-growth

Analysts increased their price target 7.8% to AU$4.86, perhaps signalling that higher revenues are a strong leading indicator for Steadfast Group's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Steadfast Group, with the most bullish analyst valuing it at AU$5.30 and the most bearish at AU$4.00 per share. This is a very narrow spread of estimates, implying either that Steadfast Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Steadfast Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Steadfast Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 14% 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) 2.9% per year. So it's pretty clear that, while Steadfast Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Steadfast Group.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Steadfast Group analysts - going out to 2024, and you can see them free on our platform here.

We also provide an overview of the Steadfast Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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