Investors in AST Groupe (EPA:ASP) had a good week, as its shares rose 2.7% to close at €1.98 following the release of its annual results. It was an okay report, and revenues came in at €201m, approximately in line with analyst estimates leading up to the results announcement. The analyst 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 analyst has changed their earnings models, following these results.
Following the recent earnings report, the consensus fromone analyst covering AST Groupe is for revenues of €170.3m in 2020, implying an uncomfortable 15% decline in sales compared to the last 12 months. Statutory earnings per share are expected to dive 36% to €0.16 in the same period. Before this earnings report, the analyst had been forecasting revenues of €204.4m and earnings per share (EPS) of €0.38 in 2020. Indeed, we can see that the analyst is a lot more bearish about AST Groupe's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
The consensus price target fell 18% to €3.30, with the weaker earnings outlook clearly leading valuation estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 15%, a significant reduction from annual growth of 19% 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 3.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - AST Groupe is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of AST Groupe's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 6 warning signs with AST Groupe (at least 1 which is significant) , and understanding these should be part of your investment process.
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