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Brembo S.p.A. (BIT:BRE) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

Simply Wall St
·3 min read

Shareholders might have noticed that Brembo S.p.A. (BIT:BRE) filed its quarterly result this time last week. The early response was not positive, with shares down 7.9% to €6.81 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at €576m, statutory earnings were in line with expectations, at €0.71 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Brembo

BIT:BRE Past and Future Earnings May 14th 2020
BIT:BRE Past and Future Earnings May 14th 2020

Taking into account the latest results, the four analysts covering Brembo provided consensus estimates of €2.21b revenue in 2020, which would reflect an uneasy 13% decline on its sales over the past 12 months. Statutory earnings per share are forecast to dive 40% to €0.38 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €2.37b and earnings per share (EPS) of €0.50 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

The analysts made no major changes to their price target of €8.00, suggesting the downgrades are not expected to have a long-term impact on Brembo'svaluation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Brembo analyst has a price target of €8.90 per share, while the most pessimistic values it at €7.20. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Brembo's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 13% revenue decline a notable change from historical growth of 6.5% 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 3.5% annually for the foreseeable future. It's pretty clear that Brembo's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Brembo. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Brembo going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Brembo that we have uncovered.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.