Oceana Group Limited (JSE:OCE) defied analyst predictions to release its yearly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 4.5% to hit R8.1b. Oceana Group reported statutory earnings per share (EPS) R6.03, which was a notable 18% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Oceana Group from dual analysts is for revenues of R9.29b in 2023 which, if met, would be a meaningful 14% increase on its sales over the past 12 months. Per-share earnings are expected to increase 8.6% to R6.75. Yet prior to the latest earnings, the analysts had been anticipated revenues of R8.69b and earnings per share (EPS) of R6.15 in 2023. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of R63.00, suggesting that the forecast performance does not have a long term impact on the company's valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Oceana Group's past performance and to peers in the same industry. The analysts are definitely expecting Oceana Group's growth to accelerate, with the forecast 14% annualised growth to the end of 2023 ranking favourably alongside historical growth of 2.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Oceana Group to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Oceana Group following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at R63.00, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Oceana Group. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
You still need to take note of risks, for example - Oceana Group has 2 warning signs we think you should be aware of.
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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.
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