Shareholders of Attendo AB (publ) (STO:ATT) will be pleased this week, given that the stock price is up 13% to kr42.02 following its latest quarterly results. It looks like the results were a bit of a negative overall. While revenues of kr3.1b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 9.3% to hit kr0.51 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Attendo's three analysts are now forecasting revenues of kr12.9b in 2020. This would be a satisfactory 5.7% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to tumble 73% to kr0.03 in the same period. In the lead-up to this report, the analysts had been modelling revenues of kr13.0b and earnings per share (EPS) of kr0.18 in 2020. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
Despite cutting their earnings forecasts,the analysts have lifted their price target 5.2% to kr51.00, suggesting that these impacts are not expected to weigh on the stock's value in the long term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Attendo analyst has a price target of kr60.00 per share, while the most pessimistic values it at kr42.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Attendo's revenue growth will slow down substantially, with revenues next year expected to grow 5.7%, compared to a historical growth rate of 10% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Attendo is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Attendo. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Attendo. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Attendo going out to 2022, and you can see them free on our platform here..
Even so, be aware that Attendo is showing 4 warning signs in our investment analysis , and 1 of those is significant...
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