As you might know, Watkin Jones Plc (LON:WJG) recently reported its half-yearly numbers. Revenues were UK£193m, 16% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of UK£0.16 being in line with what the analysts anticipated. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Watkin Jones

Following the latest results, Watkin Jones' six analysts are now forecasting revenues of UK£541.8m in 2022. This would be a huge 22% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 282% to UK£0.12. In the lead-up to this report, the analysts had been modelling revenues of UK£539.9m and earnings per share (EPS) of UK£0.17 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at UK£3.12, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Watkin Jones analyst has a price target of UK£3.25 per share, while the most pessimistic values it at UK£2.82. This is a very narrow spread of estimates, implying either that Watkin Jones is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. It's clear from the latest estimates that Watkin Jones' rate of growth is expected to accelerate meaningfully, with the forecast 48% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 7.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.6% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Watkin Jones is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Watkin Jones. Happily, there were no major changes to revenue forecasts, with the business still expected 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 in mind, we wouldn't be too quick to come to a conclusion on Watkin Jones. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Watkin Jones analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 3 warning signs for Watkin Jones that we have uncovered.

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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.