Last week saw the newest second-quarter earnings release from DO & CO Aktiengesellschaft (VIE:DOC), an important milestone in the company's journey to build a stronger business. It was a pretty mixed result, with revenues beating expectations to hit €260m. Earnings fell 9.5% short of analyst forecasts, reaching €0.95 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for DO & CO from six analysts is for revenues of €968.8m in 2020, which is a modest 5.1% increase on its sales over the past 12 months. Earnings per share are expected to jump 22% to €3.17. Before this earnings report, analysts had been forecasting revenues of €938.3m and earnings per share (EPS) of €3.07 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.
Despite these upgrades, analysts have not made any major changes to their price target of €100, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 DO & CO at €116 per share, while the most bearish prices it at €90.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Analysts are definitely expecting DO & CO's growth to accelerate, with the forecast 5.1% growth ranking favourably alongside historical growth of 1.5% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 6.1% next year. DO & CO is expected to grow at about the same rate as its market, so it's not clear that we can draw any conclusions from its growth relative to competitors.
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 DO & CO's earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that DO & CO will grow in line with the overall market. The consensus price target held steady at €100, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for DO & CO going out to 2024, and you can see them free on our platform here..
You can also see whether DO & CO is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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