As you might know, Fjord1 ASA (OB:FJORD) just kicked off its latest third-quarter results with some very strong numbers. Results were good overall, with revenues beating analyst predictions by 2.4% to hit kr706m. Earnings per share (EPS) came in at kr1.15, some 9.3% above what analysts had expected. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.
After the latest results, the three analysts covering Fjord1 are now predicting revenues of kr2.98b in 2020. If met, this would reflect a solid 8.7% improvement in sales compared to the last 12 months. Earnings per share are expected to decline 11% to kr3.11 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of kr3.04b and earnings per share (EPS) of kr3.36 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at kr45.33, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Fjord1 analyst has a price target of kr54.00 per share, while the most pessimistic values it at kr35.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Fjord1 shareholders.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Fjord1's past performance and to peers in the same market. Analysts are definitely expecting Fjord1's growth to accelerate, with the forecast 8.7% growth ranking favourably alongside historical growth of 6.6% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Fjord1 is expected to grow much faster than its market.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Fjord1. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at kr45.33, with the latest estimates not enough to have an impact on analysts' estimated valuations.
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 Fjord1 analysts - going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Fjord1's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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