KWS SAAT SE & Co. KGaA (ETR:KWS) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. Revenues and losses per share were both better than expected, with revenues of €191m leading estimates by 9.1%. Losses were smaller than analysts expected, coming in at €1.35 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. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Taking into account the latest results, the latest consensus from KWS SAAT SE KGaA's four analysts is for revenues of €1.24b in 2020, which would reflect a modest 6.2% improvement in sales compared to the last 12 months. Earnings per share are expected to surge 22% to €3.62. In the lead-up to this report, analysts had been modelling revenues of €1.23b and earnings per share (EPS) of €3.42 in 2020. So the consensus seems to have become somewhat more optimistic on KWS SAAT SE KGaA's earnings potential following these results.
The consensus price target was unchanged at €68.00, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values KWS SAAT SE KGaA at €74.00 per share, while the most bearish prices it at €62.00. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Analysts are definitely expecting KWS SAAT SE KGaA's growth to accelerate, with the forecast 6.2% growth ranking favourably alongside historical growth of 2.9% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 3.5% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that KWS SAAT SE KGaA is expected to grow much faster than its market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards KWS SAAT SE KGaA following these results. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at €68.00, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for KWS SAAT SE KGaA going out to 2024, and you can see them free on our platform here..
You can also see whether KWS SAAT SE KGaA is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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