Detailed Broker Forecasts
Hemscott currently have over sixty brokers providing research to us. The forecasts are shown in date order with the most recent being at the top. Many companies have forecasts but by no means all. If no forecasts are available a note will be shown in the box stating this.
Two future year estimates are shown for each company and include Pre-tax profit, EPS and DPS figures. At the bottom of the box we show a consensus/average figure which is calculated on a time weighted basis (calculation in the technical definitions section below). We also show the one and three changes to these consensus figures.
| Date | The date shows when each forecast was last updated or confirmed (not changed but the broker has said that they are still happy with the forecast) by the broker. |
|---|---|
| Rec | This is the current recommendation, which the broker published with the latest forecast. |
This can be a straightforward 'buy', 'sell' or 'hold', for example. More often, it lies somewhere between or even beyond these three terms, for example 'weak hold', or 'overweight', and each broker has a range of perhaps eight to twelve such gradations.
If no recommendation is showing for a specific forecast this meaning we haven't received one from the broker.
It should be understood that a single recommendation from a given broker must be viewed in its full context, namely the entire text of the research it is based on, the share price at the time of writing, and the full range of recommendations employed by that broker.
| Abbreviation | Recommendation | Abbreviation | Recommendation | Abbreviation | Recommendation |
|---|---|---|---|---|---|
| 1H | Buy / High Risk | BREC | Buy for recovery | OUTP | Outperform |
| 1L | Buy / Low Risk | BUY | Buy | OVAL | Overvalued |
| 1M | Buy / Moderate Risk | CAUT | Caution | OWGT | Overweight |
| 1S | Buy / Speculative Risk | CORE | Core sector holding | R/S | Reduce / Sell |
| 1V | Buy / Venture Risk | DEFH | Defensive hold | RED | Reduce |
| 2H | Outperform / High Risk | DHOL | Dull hold | SBUY | Strong buy |
| 2L | Outperform / Low Risk | ENEG | Equal weight negative | SELL | Sell |
| 2M | Outperform / Moderate Risk | ENEU | Equal weight neutral | SHOL | Strong hold |
| 2S | Outperform / Speculative Risk | EPOS | Equal weight positive | SOST | Sell on strength |
| 2V | Outperform / Venture Risk | FIRM | Firm hold | SPB | Speculative buy |
| 3H | Neutral / High Risk | FULL | Fully valued | SPEC | Speculative |
| 3L | Neutral / Low Risk | GBUY | Gentle buy | SPH | Speculative hold |
| 3M | Neutral / Moderate Risk | H/B | Hold / buy | SSEL | Strong sell |
| 3S | Neutral / Speculative Risk | H/S | Hold / sell | STB | Short term buy |
| 3V | Neutral / Venture Risk | HFB | Hold for recovery | STS | Short term sell |
| 4H | Under perform / High Risk | HIGH | High enough | SWIT | Switch |
| 4L | Under perform / Low Risk | HINC | Hold for income | TOPS | Top slice |
| 4M | Under perform / Moderate Risk | HLTB | Hold / long term buy | TOPY | Toppy / Top Heavy |
| 4S | Under perform / Speculative Risk | HOLD | Hold | TPR | Take profits |
| 4V | Under perform / Venture Risk | HRED | Hold / reduce | TRB | Trading buy |
| 5H | Sell / High Risk | HSB | Hold / speculative buy | TRIM | Trim |
| 5L | Sell / Low Risk | HSPC | Highly speculative | TRS | Trading sell |
| 5M | Sell / Moderate Risk | HSW | Hold / switch | TUCK | Tuck away |
| 5S | Sell / Speculative Risk | KEYB | Key buy | TUPR | Take up rights |
| 5V | Sell / Venture Risk | LTB | Long term buy | UATR | Unattractive |
| ACC | Accept bid / Offer | LTH | Long term hold | UNB | Unbundle |
| ACCU | accumulate | LTS | Long term sell | UNDP | Underperform |
| ACQ | acquire | MPER | Market perform | UNEG | Underweight negative |
| ADD | add | MRB | Medium risk buy | UNEU | Underweight neutral |
| ATR | Attractive | MTB | Medium term buy | UPOS | Underweight positive |
| AVOI | Avoid | NEG | Negative | UVAL | Undervalued |
| AWEV | Await events | NEUT | Neutral | VRSK | Very risky |
| AWOF | Await offer | ONEG | Overweight negative | WBUY | Weak buy |
| BCV | Buy convertible | ONEU | Overweight neutral | WHOL | Weak hold |
| BINC | Buy for income | OPOS | Overweight positive | WSEL | Weak sell |
| BLOW | Buy lower down | OPRI | Overpriced | YSUP | Yield support |
| BOW | Buy on weakness | OSOL | Oversold | ||
| The appearance of any suffix against a given forecast denotes exclusion from the consensus. The following suffix codes explain why the forecast is excluded: | |
| [W] | Warning, i.e. the company's recent announcement of a 'profit warning' has overtaken the forecast, and a revised forecast is awaited. |
|---|---|
| [S] | Structural change in the company, such as a merger or de-consolidation, renders the forecast obsolete. |
| [A] | Age - the forecast is old and is overtaken by events, for example it is out of line with a subsequent interim announcement. |
| [R] | Results actually achieved have overtaken the forecast. This most often appears when preliminary results are announced after the date of the forecast, and the actual result for the period is materially different from what is expected. When this difference is more than 5%, the forecast is excluded from the consensus. If the EPS forecast is within 5% of the actual result, but the dividend forecast is not, then the dividend forecast alone is excluded. |
| [D] | Different basis. |
| [B] | Broker is disqualified temporarily from issuing a new forecast by reason of currently acting for the company in a transaction, e.g. a rights issue, or an acquisition. |
- Pre-tax
- Estimated Normalised Pre-tax Profit
- EPS
- Estimated Normalised Earnings Per Share
- DPS
- Estimated Dividend Per Share
- Consensus
- Hemscott broker consensus forecasts are calculated on a date weighted basis thus giving a higher weighting to more recent forecasts.
Fully-worked illustration
The following illustration shows how the consensus is calculated for a range of broker forecasts of earnings per share. Each forecast is date-weighted over 180 days, giving maximum emphasis to the most recent forecast, and reducing progressively to zero emphasis for a forecast six months old.
(NOTE: When calculating the date weighting, the reference point used is midway between first publication date and the latest reconfirmation date.)
First, a date-weighted average is established to determine the standard deviation of the eligible forecasts. This, in turn, enables any outlying forecasts to be identified, and excluded. Finally, a date-weighted average of the remaining forecasts is taken to be the consensus.
A total of nine brokers are providing forecasts in this example.
Date-weighted average
The first stage is to calculate a date-weighted average of all the forecasts as follows, giving a result of 35.5p. The working figures are shown beneath:
- Step 1: Date-weight each forecast by its age in days, subtracted from 180.
- Step 2: Add together the weighted EPS forecasts.
- Step 3: Divide the sum of the weighted EPS forecasts, 38442.5, by the sum of the weights, 1085, to find the weighted average EPS, 35.5p.
| Forecast EPS (p) (f) | Age in days (a) | Weight (180-a) (w) | Weighted EPS (f x w) | |
|---|---|---|---|---|
| Totals: | 1085 | 38442.5 | ||
| Broker 'A' | 35.7 | 195 | 0 | 0 |
| Broker 'B' | 35.3 | 163 | 17 | 600.1 |
| Broker 'C' | 34.9 | 57 | 123 | 4292.7 |
| Broker 'D' | 38.8 | 42 | 138 | 5354.4 |
| Broker 'E' | 35.2 | 25 | 155 | 5456.0 |
| Broker 'F' | 34.9 | 19 | 161 | 5618.9 |
| Broker 'G' | 34.0 | 17 | 163 | 5542.0 |
| Broker 'H' | 35.3 | 17 | 163 | 5753.9 |
| Broker 'I' | 35.3 | 15 | 165 | 5824.5 |
This can be summarised as follows:
weighted average EPS (p) = sum of the weighted EPS forecasts / sum of the weights
Thus
Date weighted average EPS = 38442.5 / 1085 = 35.5p
Note that the forecast from Broker 'A' gets zero weighting on account of its age, being more than 180 days old, and is therefore excluded.
Standard deviation
Next, the standard deviation is calculated so as outlying forecasts can be identified. The calculation gives a result of 1.33p, and involves four steps to establish the root mean square of the deviations from the weighted average, as follows:
- Step 1: Calculate the deviation of each forecast from the weighted average
- Step 2: Calculate the square of each deviation
- Step 3: Find the mean of the squared deviations
- Step 4: Calculate the square root of the mean to give the standard deviation
The following table illustrates how the standard deviation is derived from the data in the example. The number of brokers is now eight (one having been excluded by age of forecast) and the weighted average EPS is 35.5p:
| Forecast EPS (p) (f) | Deviation from the consensus (p) | Square of each deviation | |
|---|---|---|---|
| Broker 'A' | excluded | - | - |
| Broker 'B' | 35.3 | -0.2 | 0.04 |
| Broker 'C' | 34.9 | -0.6 | 0.36 |
| Broker 'D' | 38.8 | +3.3 | 10.89 |
| Broker 'E' | 35.2 | -0.3 | 0.09 |
| Broker 'F' | 34.9 | -0.6 | 0.36 |
| Broker 'G' | 34.0 | -1.5 | 2.25 |
| Broker 'H' | 35.3 | -0.2 | 0.04 |
| Broker 'I' | 35.3 | -0.2 | 0.04 |
Total of the squares of each deviation = 14
Mean of the squared deviations = 14.07 / 8 = 1.76P
Standard deviation = square root of 1.76 = 1.33P
Note that in order to lie within one standard deviation of the weighted average, the forecasts in the above example must remain within the range 35.5p + or - 1.3p, namely between 34.2p and 36.8p.
Brokers 'D' and 'G', forecasting 38.8p and 34.0p respectively, are therefore regarded as outlying forecasts, and are excluded from the final consensus along with Broker 'A', whose forecast, being more than 180 days old, is excluded already.
Consensus
The consensus is taken to be the date-weighted average of the remaining forecasts, having excluded those which are old or outlying. The final calculation is therefore as follows, giving a consensus EPS of 35.1p. The working figures are shown beneath:
- Step 1: Date-weight each qualifying forecast by its age in days, subtracted from 180.
- Step 2: Add the together the weighted EPS forecasts (27546.1p)
- Step 3: Divide the sum of the weighted EPS forecasts, 27546.1, by the sum of the weights, 784, to give weighted average EPS, 35.1p
Which can be summarised as:
weighted average EPS (p) = sum of the weighted EPS forecasts / sum of the weights
| Forecast EPS (p) (f) | Age in days (a) | Weight (180-a) (w) | Weighted EPS (f x w) | |
|---|---|---|---|---|
| Totals | 784 | 27546.1 | ||
| Broker 'A' | 35.7 | 195 | over 6m old | |
| Broker 'B' | 35.3 | 163 | 17 | 600.1 |
| Broker 'C' | 34.9 | 57 | 123 | 4292.7 |
| Broker 'D' | 38.8 | 42 | outlying | |
| Broker 'E' | 35.2 | 25 | 155 | 5456.0 |
| Broker 'F' | 34.9 | 19 | 161 | 5618.9 |
| Broker 'G' | 34.0 | 17 | outlying | |
| Broker 'H' | 35.3 | 17 | 163 | 5753.9 |
| Broker 'I' | 35.3 | 15 | 165 | 5824.5 |
Consensus EPS = 27546.1 / 784 = 35.1
- 1m Change
- Where a consensus forecast value for the relevant period existed one month ago, the change indicates the amount by which the latest consensus value has moved up or down.
The figures for Pre-tax are shown in £m and both EPS and DPS are in pence.
If no figure is showing this means that there has been no change in the consensus over that period.
The calculation is as follows:
Change = Latest consensus value - Consensus value 1 month ago
- 3m Change
- Where a consensus forecast value for the relevant period existed three months previously, the change indicates in pence the amount by which the latest consensus value has moved up (+) or down (-).
The figures for Pre-tax are shown in £m and both EPS and DPS are in pence.
If no figure is showing this means that there has been no change in the consensus over that period.
The calculation is as follows:
Change = Latest consensus value - Consensus value 3 months ago