A week ago, KONE Oyj (HEL:KNEBV) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of €2.2b arriving 8.7% ahead of forecasts. Statutory earnings per share (EPS) were €0.29, 6.5% ahead of estimates. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the recent earnings report, the consensus from 25 analysts covering KONE Oyj is for revenues of €9.70b in 2020, implying a perceptible 2.8% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to reduce 3.5% to €1.70 in the same period. In the lead-up to this report, the analysts had been modelling revenues of €9.68b and earnings per share (EPS) of €1.72 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.
The analysts reconfirmed their price target of €50.64, showing that the business is executing well and in line with expectations. 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 KONE Oyj at €66.00 per share, while the most bearish prices it at €43.00. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the KONE Oyj's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.8%, a significant reduction from annual growth of 3.8% 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 5.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - KONE Oyj is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. 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 KONE Oyj. Long-term earnings power is much more important than next year's profits. We have forecasts for KONE Oyj going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for KONE Oyj you should know about.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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