Investors in NIBE Industrier AB (publ) (STO:NIBE B) had a good week, as its shares rose 3.0% to close at kr188 following the release of its first-quarter results. It looks like the results were a bit of a negative overall. While revenues of kr6.3b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.9% to hit kr0.84 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, NIBE Industrier's five analysts are forecasting 2020 revenues to be kr26.2b, approximately in line with the last 12 months. Statutory earnings per share are expected to reduce 6.6% to kr4.03 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr26.2b and earnings per share (EPS) of kr4.29 in 2020. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
Despite cutting their earnings forecasts,the analysts have lifted their price target 6.3% to kr169, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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 NIBE Industrier at kr190 per share, while the most bearish prices it at kr140. This is a very narrow spread of estimates, implying either that NIBE Industrier is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that NIBE Industrier's revenue growth is expected to slow, with forecast 1.3% increase next year well below the historical 17%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.3% per year. Factoring in the forecast slowdown in growth, it seems obvious that NIBE Industrier is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for NIBE Industrier. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that NIBE Industrier's revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for NIBE Industrier going out to 2022, and you can see them free on our platform here..
You still need to take note of risks, for example - NIBE Industrier has 2 warning signs we think you should be aware of.
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