Investors in Loomis AB (publ) (STO:LOOM B) had a good week, as its shares rose 5.4% to close at kr252 following the release of its quarterly results. It was a workmanlike result, with revenues of kr5.3b coming in 2.7% ahead of expectations, and statutory earnings per share of kr4.85, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the five analysts covering Loomis provided consensus estimates of kr20.2b revenue in 2020, which would reflect a small 5.4% decline on its sales over the past 12 months. Statutory earnings per share are expected to drop 19% to kr17.48 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr20.9b and earnings per share (EPS) of kr20.82 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share numbers.
Despite the cuts to forecast earnings, there was no real change to the kr319 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Loomis, with the most bullish analyst valuing it at kr356 and the most bearish at kr300 per share. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that Loomis is an easy business to forecast or that the the analysts are all using similar assumptions.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 5.4%, a significant reduction from annual growth of 6.9% 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 4.5% annually for the foreseeable future. It's pretty clear that Loomis' revenues are expected to perform substantially worse than 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. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Loomis going out to 2022, and you can see them free on our platform here..
Plus, you should also learn about the 2 warning signs we've spotted with Loomis .
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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