Investors in Garo Aktiebolag (publ) (STO:GARO) had a good week, as its shares rose 7.8% to close at kr387 following the release of its yearly results. Garo Aktiebolag reported kr1.0b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of kr8.57 beat expectations, being 2.3% higher than what analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Garo Aktiebolag after the latest results.
Following the latest results, Garo Aktiebolag's dual analysts are now forecasting revenues of kr1.13b in 2020. This would be a solid 12% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to step up 19% to kr10.22. In the lead-up to this report, analysts had been modelling revenues of kr1.14b and earnings per share (EPS) of kr10.15 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 7.7% to kr350 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of Garo Aktiebolag's earnings by assigning a price premium.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Garo Aktiebolag's performance in recent years. It's pretty clear that analysts expect Garo Aktiebolag's revenue growth will slow down substantially, with revenues next year expected to grow 12%, compared to a historical growth rate of 15% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 35% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Garo Aktiebolag.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Garo Aktiebolag's revenues are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Garo Aktiebolag going out as far as 2022, and you can see them free on our platform here.
It might also be worth considering whether Garo Aktiebolag's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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