Argo Blockchain plc (LON:ARB) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year’s statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.
Following the upgrade, the latest consensus from Argo Blockchain’s dual analysts is for revenues of UK£79m in 2021, which would reflect a sizeable 104% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 332% to UK£0.10. Previously, the analysts had been modelling revenues of UK£58m and earnings per share (EPS) of UK£0.067 in 2021. So we can see there’s been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Check out our latest analysis for Argo Blockchain
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of UK£2.45, suggesting that the forecast performance does not have a long term impact on the company’s valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Argo Blockchain at UK£2.50 per share, while the most bearish prices it at UK£2.40. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Argo Blockchain is an easy business to forecast or the underlying assumptions are obvious.
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. The analysts are definitely expecting Argo Blockchain’s growth to accelerate, with the forecast 3x annualised growth to the end of 2021 ranking favourably alongside historical growth of 132% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Argo Blockchain to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year’s earnings expectations, it might be time to take another look at Argo Blockchain.
Analysts are clearly in love with Argo Blockchain at the moment, but before diving in – you should be aware that we’ve identified some warning flags with the business, such as concerns around earnings quality. For more information, you can click through to our platform to learn more about this and the 2 other warning signs we’ve identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
When trading Argo Blockchain or any other investment, use the platform considered by many to be the Professional’s Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.