ALD S.A. (EPA:ALD) shares fell 6.4% to €12.36 in the week since its latest full-year results. ALD reported in line with analyst predictions, delivering revenues of €9.8b and statutory earnings per share of €1.40, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on ALD after the latest results.
Taking into account the latest results, the latest consensus from ALD's six analysts is for revenues of €10.3b in 2020, which would reflect a credible 5.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to increase 2.4% to €1.43. In the lead-up to this report, analysts had been modelling revenues of €10.3b and earnings per share (EPS) of €1.48 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at €15.83, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on ALD, with the most bullish analyst valuing it at €18.00 and the most bearish at €14.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's pretty clear that analysts expect ALD's revenue growth will slow down substantially, with revenues next year expected to grow 5.4%, compared to a historical growth rate of 10% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.3% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkALD will grow faster than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that ALD's revenues are expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple ALD analysts - going out to 2022, and you can see them free on our platform here.
You can also view our analysis of ALD's balance sheet, and whether we think ALD is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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