Bouygues SA (EPA:EN) just released its third-quarter report and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of €10b, some 3.5% above estimates, and earnings per share (EPS) coming in at €1.68, 79% ahead of expectations. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings consensus estimates to see what could be in store for next year.
Taking into account the latest results, Bouygues's 16 analysts currently expect revenues in 2020 to be €37.8b, approximately in line with the last 12 months. Earnings per share are expected to drop 15% to €3.16 in the same period. In the lead-up to this report, analysts had been modelling revenues of €37.7b and earnings per share (EPS) of €3.17 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of €40.83, showing that the business is executing well and in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Bouygues at €44.74 per share, while the most bearish prices it at €30.80. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
In addition, we can look to Bouygues's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.9% a significant reduction from annual growth of 2.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 2.9% annually for the foreseeable future. It's pretty clear that Bouygues's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse 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. At Simply Wall St, we have a full range of analyst estimates for Bouygues going out to 2023, and you can see them free on our platform here..
It might also be worth considering whether Bouygues's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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