Last week, you might have seen that Olvi Oyj (HEL:OLVAS) released its full-year result to the market. The early response was not positive, with shares down 9.4% to €36.70 in the past week. Results were roughly in line with estimates, with revenues of €410m and statutory earnings per share of €2.02. 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
After the latest results, the two analysts covering Olvi Oyj are now predicting revenues of €423.2m in 2020. If met, this would reflect a credible 3.2% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to climb 14% to €2.29. Before this earnings report, analysts had been forecasting revenues of €417.5m and earnings per share (EPS) of €2.22 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 8.1% to €40.00, suggesting that higher earnings estimates flow through to the stock's valuation as well.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that Olvi Oyj's revenue growth is expected to slow, with forecast 3.2% increase next year well below the historical 5.8%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.3% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Olvi Oyj to grow slower than the wider 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 Olvi Oyj following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Olvi Oyj. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Olvi Oyj going out as far as 2022, and you can see them free on our platform here.
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