Shareholders in Aegean Airlines S.A. (ATH:AEGN) had a terrible week, as shares crashed 20% to €3.35 in the week since its latest yearly results. It was a pretty bad result overall; while revenues were in line with expectations at €1.3b, statutory losses exploded to per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the recent earnings report, the consensus fromfour analysts covering Aegean Airlines is for revenues of €1.17b in 2020, implying a not inconsiderable 11% decline in sales compared to the last 12 months. Statutory earnings per share are expected to tumble 34% to €0.63 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.33b and earnings per share (EPS) of €0.84 in 2020. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.
The consensus price target fell 7.0% to €9.27, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Aegean Airlines, with the most bullish analyst valuing it at €11.20 and the most bearish at €5.45 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We would highlight that sales are expected to reverse, with the forecast 11% revenue decline a notable change from historical growth of 7.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Aegean Airlines is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Aegean Airlines going out to 2024, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Aegean Airlines that you should be aware of.
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