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NCAB Group AB (publ) Just Beat EPS By 5.8%: Here's What Analysts Think Will Happen Next

Simply Wall St

Last week, you might have seen that NCAB Group AB (publ) (STO:NCAB) released its annual result to the market. The early response was not positive, with shares down 5.6% to kr161 in the past week. The result was positive overall - although revenues of kr1.8b were in line with what analysts predicted, NCAB Group surprised by delivering a statutory profit of kr7.61 per share, modestly greater than expected. 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 statutory forecasts to see whether analysts have changed their earnings models, following these results.

View our latest analysis for NCAB Group

OM:NCAB Past and Future Earnings, February 21st 2020

Following the latest results, NCAB Group's lone analyst are now forecasting revenues of kr1.90b in 2020. This would be a satisfactory 6.8% improvement in sales compared to the last 12 months. Statutory per share are forecast to be kr7.62, approximately in line with the last 12 months. Prior to the latest earnings, analysts were forecasting revenues of kr1.87b in 2020, and did not provide an EPS estimate. It looks like analysts are starting to apply closer scrutiny to NCAB Group following these results. While they haven't made any changes to their revenue estimates, they began providing an earnings forecast for next year.

Analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 17% to kr170.

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. It's pretty clear that analysts expect NCAB Group's revenue growth will slow down substantially, with revenues next year expected to grow 6.8%, compared to a historical growth rate of 13% over the past three years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 6.1% per year. So it's pretty clear that, while NCAB Group's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The biggest takeaway for us from these new estimates is the bullish forecast for profits next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on NCAB Group. Long-term earnings power is much more important than next year's profits. We have analyst estimates for NCAB Group going out as far as 2022, and you can see them free on our platform here.

It might also be worth considering whether NCAB Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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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