Internationella Engelska Skolan i Sverige Holdings II AB (publ) (STO:ENG) came out with its quarterly results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. It looks like a pretty bad result, all things considered. Although revenues of kr601m were in line with analyst predictions, earnings fell badly short, missing estimates by 57% to hit kr0.43 per share. 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've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
After the latest results, the one analyst covering Internationella Engelska Skolan i Sverige Holdings II are now predicting revenues of kr2.96b in 2020. If met, this would reflect a credible 5.5% improvement in sales compared to the last 12 months. Earnings per share are expected to dip 3.3% to kr3.85 in the same period. In the lead-up to this report, analysts had been modelling revenues of kr3.00b and earnings per share (EPS) of kr5.03 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the large cut to new EPS forecasts.
Although analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 6.8% to kr79.00, suggesting the revised estimates are not indicative of a weaker long-term future for the business.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that Internationella Engelska Skolan i Sverige Holdings II's revenue growth is expected to slow, with forecast 5.5% increase next year well below the historical 14%p.a. growth over the last three years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 9.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Internationella Engelska Skolan i Sverige Holdings II.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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