Yahoo Finance Diploma PLC (LON:DPLM) Half-Yearly Results: Here's What Analysts Are Forecasting For This Year
Shareholders might have noticed that Diploma PLC (LON:DPLM) filed its half-yearly result this time last week. The early response was not positive, with shares down 3.9% to UK£24.22 in the past week. Diploma reported in line with analyst predictions, delivering revenues of UK£449m and statutory earnings per share of UK£0.56, suggesting the business is executing well and in line with its plan. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Diploma
After the latest results, the seven analysts covering Diploma are now predicting revenues of UK£955.9m in 2022. If met, this would reflect a notable 9.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 19% to UK£0.70. Before this earnings report, the analysts had been forecasting revenues of UK£951.5m and earnings per share (EPS) of UK£0.79 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
The consensus price target held steady at UK£31.50, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Diploma, with the most bullish analyst valuing it at UK£38.50 and the most bearish at UK£24.50 per share. 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 Diploma shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Diploma's 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 13% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Diploma to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Diploma. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at UK£31.50, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Diploma going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether Diploma's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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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.
