Shareholders in Basic-Fit N.V. (AMS:BFIT) had a terrible week, as shares crashed 23% to €21.55 in the week since its latest annual results. It looks like a pretty bad result, all things considered. Although revenues of €515m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 38% to hit €0.20 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts 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 analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Basic-Fit's six analysts is for revenues of €650.6m in 2020, which would reflect a substantial 26% increase on its sales over the past 12 months. Statutory earnings per share are expected to leap 266% to €0.74. Yet prior to the latest earnings, analysts had been forecasting revenues of €637.0m and earnings per share (EPS) of €0.68 in 2020. It looks like there's been a modest increase in sentiment following the latest results, with analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Although analysts have upgraded their earnings estimates, there was no change to the consensus price target of €35.53, suggesting that the forecast performance does not have a long term impact on the company's valuation 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 Basic-Fit analyst has a price target of €40.00 per share, while the most pessimistic values it at €30.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
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. Analysts are definitely expecting Basic-Fit's growth to accelerate, with the forecast 26% growth ranking favourably alongside historical growth of 22% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Basic-Fit is expected to grow much faster than its market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Basic-Fit's earnings potential next year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. The consensus price target held steady at €35.53, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Basic-Fit. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Basic-Fit analysts - going out to 2024, and you can see them free on our platform here.
You can also see whether Basic-Fit is carrying too much debt, and whether its balance sheet is healthy, 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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