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Young & Co.'s Brewery, P.L.C. Just Missed EPS By 44%: Here's What Analysts Think Will Happen Next

Young & Co.'s Brewery, P.L.C. (LON:YNGA) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Statutory earnings per share fell badly short of expectations, coming in at UK£0.39, some 44% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at UK£312m. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Young's Brewery

AIM:YNGA Past and Future Earnings June 7th 2020
AIM:YNGA Past and Future Earnings June 7th 2020

After the latest results, the consensus from Young's Brewery's three analysts is for revenues of UK£235.2m in 2021, which would reflect a sizeable 25% decline in sales compared to the last year of performance. Statutory earnings per share are predicted to leap 62% to UK£0.64. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£207.3m and losses of UK£0.14 per share in 2021. So we can see that the latest results have sparked a pretty clear upgrade to expectations, with higher revenues expected to lead to profit sooner than previously forecast.

Despite these upgrades,the analysts have not made any major changes to their price target of UK£15.20, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. Currently, the most bullish analyst values Young's Brewery at UK£18.50 per share, while the most bearish prices it at UK£12.30. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 25% revenue decline a notable change from historical growth of 6.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Young's Brewery is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting Young's Brewery to become profitable next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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 estimates - from multiple Young's Brewery analysts - going out to 2023, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Young's Brewery you should be aware of.

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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. 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. Thank you for reading.