It's been a sad week for Raketech Group Holding PLC (STO:RAKE), who've watched their investment drop 11% to kr11.58 in the week since the company reported its quarterly result. Raketech Group Holding missed revenue estimates by 2.6%, with sales of €5.7m, although earnings per share (EPS) of €0.051 beat expectations, coming in 2.4% ahead of analyst estimates. 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. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
Following last week's earnings report, Raketech Group Holding's two analysts are forecasting 2020 revenues to be €25.4m, approximately in line with the last 12 months. Earnings per share are expected to descend 15% to €0.21 in the same period. In the lead-up to this report, analysts had been modelling revenues of €26.0m and earnings per share (EPS) of €0.23 in 2020. It's pretty clear that analyst sentiment has fallen after the latest results, leading to lower revenue forecasts and a small dip in earnings per share estimates.
The consensus price target fell 39% to kr18.80, with the weaker earnings outlook clearly leading analyst valuation estimates.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.9% a significant reduction from annual growth of 29% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 12% annually for the foreseeable future. It's pretty clear that Raketech Group Holding's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Raketech Group Holding. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Raketech Group Holding. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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