The full-year results for Indutrade AB (publ) (STO:INDT) were released last week, making it a good time to revisit its performance. Results were roughly in line with estimates, with revenues of kr18b and statutory earnings per share of kr12.26. 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 Indutrade after the latest results.
Taking into account the latest results, the latest consensus from Indutrade's three analysts is for revenues of kr19.3b in 2020, which would reflect a modest 5.0% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 5.8% to kr12.97. In the lead-up to this report, analysts had been modelling revenues of kr19.2b and earnings per share (EPS) of kr13.27 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 small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at kr296, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Indutrade at kr400 per share, while the most bearish prices it at kr205. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Indutrade's performance in recent years. We would highlight that Indutrade's revenue growth is expected to slow, with forecast 5.0% increase next year well below the historical 12%p.a. growth over the last five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 4.9% per year. So it's pretty clear that, while Indutrade's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
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 Indutrade. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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 in mind, we wouldn't be too quick to come to a conclusion on Indutrade. Long-term earnings power is much more important than next year's profits. We have forecasts for Indutrade going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Indutrade's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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