It's been a sad week for Bureau Veritas SA (EPA:BVI), who've watched their investment drop 11% to €22.05 in the week since the company reported its full-year result. It looks like the results were a bit of a negative overall. While revenues of €5.1b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.9% to hit €0.83 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the latest consensus from Bureau Veritas's 15 analysts is for revenues of €5.22b in 2020, which would reflect an okay 2.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 8.1% to €0.90. Before this earnings report, analysts had been forecasting revenues of €5.27b and earnings per share (EPS) of €0.98 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at €24.79, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Bureau Veritas analyst has a price target of €29.00 per share, while the most pessimistic values it at €21.00. 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.
Further, we can compare these estimates to past performance, and see how Bureau Veritas forecasts compare to the wider market's forecast performance. We can infer from the latest estimates that analysts are expecting a continuation of Bureau Veritas's historical trends, as next year's forecast 2.4% revenue growth is roughly in line with 2.6% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.5% per year. So it's pretty clear that Bureau Veritas is expected to grow slower than similar companies in the same market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Bureau Veritas. Long-term earnings power is much more important than next year's profits. We have forecasts for Bureau Veritas going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Bureau Veritas's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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