It's been a pretty great week for Coor Service Management Holding AB (STO:COOR) shareholders, with its shares surging 13% to kr64.50 in the week since its latest quarterly results. Revenues were kr2.5b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at kr0.30, an impressive 36% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the three analysts covering Coor Service Management Holding, is for revenues of kr9.57b in 2020, which would reflect a noticeable 7.2% reduction in Coor Service Management Holding's sales over the past 12 months. Statutory earnings per share are forecast to tumble 71% to kr0.48 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr10.0b and earnings per share (EPS) of kr1.30 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.
The analysts made no major changes to their price target of kr76.00, suggesting the downgrades are not expected to have a long-term impact on Coor Service Management Holding'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. Currently, the most bullish analyst values Coor Service Management Holding at kr80.00 per share, while the most bearish prices it at kr72.00. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that Coor Service Management Holding is an easy business to forecast or that the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 7.2% revenue decline a notable change from historical growth of 8.5% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.8% next year. It's pretty clear that Coor Service Management Holding'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 Coor Service Management Holding. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Coor Service Management Holding going out to 2022, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Coor Service Management Holding that you should be aware of.
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