Investors in Husqvarna AB (publ) (STO:HUSQ B) had a good week, as its shares rose 4.2% to close at kr76.48 following the release of its full-year results. The result was positive overall - although revenues of kr42b were in line with what analysts predicted, Husqvarna surprised by delivering a statutory profit of kr4.42 per share, modestly greater than expected. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, Husqvarna's seven analysts currently expect revenues in 2020 to be kr42.3b, approximately in line with the last 12 months. Statutory earnings per share are expected to step up 15% to kr5.07. In the lead-up to this report, analysts had been modelling revenues of kr42.5b and earnings per share (EPS) of kr5.10 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Analysts reconfirmed their price target of kr87.89, showing that the business is executing well and in line with expectations. 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 Husqvarna at kr95.00 per share, while the most bearish prices it at kr78.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Husqvarna's performance in recent years. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.04% a significant reduction from annual growth of 4.8% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 2.7% next year. It's pretty clear that Husqvarna's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Husqvarna's revenues are expected to perform worse 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 in mind, we wouldn't be too quick to come to a conclusion on Husqvarna. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Husqvarna going out to 2022, and you can see them free on our platform here..
It might also be worth considering whether Husqvarna's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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