Nomad Foods Limited Just Missed EPS By 52%: Here's What Analysts Think Will Happen Next
Investors in Nomad Foods Limited (NYSE:NOMD) had a good week, as its shares rose 4.9% to close at US$19.50 following the release of its annual results. Statutory earnings per share fell badly short of expectations, coming in at €0.15, some 52% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at €3.0b. Following the result, the 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Nomad Foods
Taking into account the latest results, the consensus forecast from Nomad Foods' seven analysts is for revenues of €3.15b in 2024. This reflects a satisfactory 3.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 50% to €1.78. In the lead-up to this report, the analysts had been modelling revenues of €3.15b and earnings per share (EPS) of €1.79 in 2024. 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.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$24.14. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Nomad Foods, with the most bullish analyst valuing it at US$26.78 and the most bearish at US$22.05 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Nomad Foods' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.6% growth on an annualised basis. This is compared to a historical growth rate of 6.8% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.6% per year. Even after the forecast slowdown in growth, it seems obvious that Nomad Foods is also expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$24.14, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Nomad Foods. Long-term earnings power is much more important than next year's profits. We have forecasts for Nomad Foods going out to 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Nomad Foods that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
