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Earnings Miss: B&S Group S.A. Missed EPS By 21% And Analysts Are Revising Their Forecasts

Simply Wall St

B&S Group S.A. (AMS:BSGR) shares fell 7.8% to €8.36 in the week since its latest yearly results. It looks like a pretty bad result, all things considered. Although revenues of €2.0b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 21% to hit €0.56 per share. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for B&S Group

ENXTAM:BSGR Past and Future Earnings, February 27th 2020

After the latest results, the four analysts covering B&S Group are now predicting revenues of €2.12b in 2020. If met, this would reflect a credible 7.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to leap 64% to €0.92. Before this earnings report, analysts had been forecasting revenues of €2.13b and earnings per share (EPS) of €0.96 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at €14.63, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values B&S Group at €20.50 per share, while the most bearish prices it at €11.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It's pretty clear that analysts expect B&S Group's revenue growth will slow down substantially, with revenues next year expected to grow 7.4%, compared to a historical growth rate of 10% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.6% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkB&S Group will grow faster than the wider market.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for B&S Group. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that B&S Group's revenues are expected to grow faster than the wider market. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple B&S Group analysts - going out to 2022, and you can see them free on our platform here.

It might also be worth considering whether B&S Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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