These Analysts Think Grosvenor Capital Management, L.P.’s (NASDAQ:GCMG) Sales Are Under Threat

Today is shaping up negative for Grosvenor Capital Management, L.P. (NASDAQ:GCMG) shareholders, with the analysts delivering a substantial negative revision to this year’s forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the four analysts covering Grosvenor Capital Management provided consensus estimates of US$467m revenue in 2022, which would reflect an uncomfortable 12% decline on its sales over the past 12 months. Per-share earnings are expected to surge 423% to US$0.66. Previously, the analysts had been modelling revenues of US$548m and earnings per share (EPS) of US$0.72 in 2022. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.

See our latest analysis for Grosvenor Capital Management


Analysts made no major changes to their price target of US$10.50, suggesting the downgrades are not expected to have a long-term impact on Grosvenor Capital Management’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 Grosvenor Capital Management’s past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 16% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 18% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Grosvenor Capital Management is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Grosvenor Capital Management’s revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to this year’s forecasts, we’d be feeling a little more wary of Grosvenor Capital Management going forwards.

After a downgrade like this, it’s pretty clear that previous forecasts were too optimistic. What’s more, we’ve spotted several possible issues with Grosvenor Capital Management’s business, like a weak balance sheet. For more information, you can click here to discover this and the 3 other flags we’ve identified.

You can also see our analysis of Grosvenor Capital Management’s Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.