Galp Energia, SGPS, S.A. Just Missed EPS By 23%: Here's What Analysts Think Will Happen Next
The analysts might have been a bit too bullish on Galp Energia, SGPS, S.A. (ELI:GALP), given that the company fell short of expectations when it released its full-year results last week. Results showed a clear earnings miss, with €17b revenue coming in 3.1% lower than what the analystsexpected. Statutory earnings per share (EPS) of €0.47 missed the mark badly, arriving some 23% below what was expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Galp Energia SGPS after the latest results.
See our latest analysis for Galp Energia SGPS
After the latest results, the consensus from Galp Energia SGPS's 18 analysts is for revenues of €15.8b in 2020, which would reflect a discernible 4.7% decline in sales compared to the last year of performance. Per-share earnings are expected to leap 23% to €0.58. Before this earnings report, the analysts had been forecasting revenues of €17.2b and earnings per share (EPS) of €0.91 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.
It'll come as no surprise then, to learn thatthe analysts have cut their price target 10% to €13.58. 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. The most optimistic Galp Energia SGPS analyst has a price target of €17.00 per share, while the most pessimistic values it at €9.00. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.7%, a significant reduction from annual growth of 0.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.0% annually for the foreseeable future. It's pretty clear that Galp Energia SGPS's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Galp Energia SGPS going out to 2024, and you can see them free on our platform here..
Before you take the next step you should know about the 4 warning signs for Galp Energia SGPS that we have uncovered.
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