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Investors in Linde plc (NYSE:LIN) had a good week, as its shares rose 2.8% to close at US$257 following the release of its annual results. It was a credible result overall, with revenues of US$27b and statutory earnings per share of US$4.71 both in line with analyst estimates, showing that Linde is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Linde from 24 analysts is for revenues of US$29.0b in 2021 which, if met, would be a reasonable 6.4% increase on its sales over the past 12 months. Per-share earnings are expected to leap 69% to US$8.03. In the lead-up to this report, the analysts had been modelling revenues of US$28.7b and earnings per share (EPS) of US$8.04 in 2021. 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 US$294, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Linde, with the most bullish analyst valuing it at US$320 and the most bearish at US$252 per share. This is a very narrow spread of estimates, implying either that Linde is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Linde's revenue growth will slow down substantially, with revenues next year expected to grow 6.4%, compared to a historical growth rate of 26% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.1% next year. Factoring in the forecast slowdown in growth, it looks like Linde is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$294, with the latest estimates not enough to have an impact on their price targets.
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 Linde going out to 2025, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Linde that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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