ICA Gruppen AB (publ) (STO:ICA) defied analyst predictions to release its quarterly results, which were ahead of market expectations. The company beat expectations with revenues of kr30b arriving 2.6% ahead of forecasts. Statutory earnings per share (EPS) were kr4.83, 8.5% 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from ICA Gruppen's four analysts is for revenues of kr125.0b in 2020, which would reflect an okay 2.8% increase on its sales over the past 12 months. Per-share earnings are expected to climb 15% to kr20.56. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr124.9b and earnings per share (EPS) of kr20.33 in 2020. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of kr365, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic ICA Gruppen analyst has a price target of kr425 per share, while the most pessimistic values it at kr300. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that ICA Gruppen's revenue growth is expected to slow, with forecast 2.8% increase next year well below the historical 5.0%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.0% next year. So it's pretty clear that, while ICA Gruppen's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at kr365, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple ICA Gruppen analysts - going out to 2022, 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 ICA Gruppen that we have uncovered.
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