One thing we could say about the analysts on Arbuthnot Banking Group PLC (LON:ARBB) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Surprisingly the share price has been buoyant, rising 26% to UK£9.25 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the downgrade, the consensus from two analysts covering Arbuthnot Banking Group is for revenues of UK£64m in 2020, implying a chunky 10% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£87m in 2020. The consensus view seems to have become more pessimistic on Arbuthnot Banking Group, noting the pretty serious reduction to revenue estimates in this update.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 10%, a significant reduction from annual growth of 6.7% 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 1.0% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Arbuthnot Banking Group is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Arbuthnot Banking Group going forwards.
But wait - there's more! We have estimates for Arbuthnot Banking Group from its two analysts out until 2021, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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