Yahoo Finance The Consensus EPS Estimates For Great-West Lifeco Inc. (TSE:GWO) Just Fell Dramatically
Market forces rained on the parade of Great-West Lifeco Inc. (TSE:GWO) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
After this downgrade, Great-West Lifeco's eight analysts are now forecasting revenues of CA$47b in 2020. This would be a satisfactory 5.1% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to accumulate 9.2% to CA$2.72. Before this latest update, the analysts had been forecasting revenues of CA$55b and earnings per share (EPS) of CA$3.05 in 2020. Indeed, we can see that the analysts are a lot more bearish about Great-West Lifeco's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for Great-West Lifeco
Analysts made no major changes to their price target of CA$31.58, suggesting the downgrades are not expected to have a long-term impact on Great-West Lifeco'svaluation. 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. There are some variant perceptions on Great-West Lifeco, with the most bullish analyst valuing it at CA$39.00 and the most bearish at CA$22.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. We can infer from the latest estimates that forecasts expect a continuation of Great-West Lifeco'shistorical trends, as next year's 5.1% revenue growth is roughly in line with 4.4% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 2.2% per year. So although Great-West Lifeco is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Great-West Lifeco. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Great-West Lifeco.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Great-West Lifeco analysts - going out to 2021, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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