Results: AtkinsRéalis Exceeded Expectations And The Consensus Has Updated Its Estimates
AtkinsRéalis (TSE:ATRL) defied analyst predictions to release its yearly results, which were ahead of market expectations. The company beat expectations with revenues of CA$8.6b arriving 2.7% ahead of forecasts. Statutory earnings per share (EPS) were CA$1.64, 5.4% ahead of estimates. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for AtkinsRéalis
Taking into account the latest results, the current consensus from AtkinsRéalis' eight analysts is for revenues of CA$9.10b in 2024. This would reflect a reasonable 5.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to climb 18% to CA$1.93. Before this earnings report, the analysts had been forecasting revenues of CA$8.63b and earnings per share (EPS) of CA$2.33 in 2024. So it's pretty clear the analysts have mixed opinions on AtkinsRéalis after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.
The analysts also upgraded AtkinsRéalis' price target 13% to CA$59.19, implying that the higher revenue expected to generate enough value to offset the forecast decline in earnings. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic AtkinsRéalis analyst has a price target of CA$66.00 per share, while the most pessimistic values it at CA$46.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. One thing stands out from these estimates, which is that AtkinsRéalis is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.3% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.1% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 1.8% per year. So it looks like AtkinsRéalis is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for AtkinsRéalis. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes 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 AtkinsRéalis. Long-term earnings power is much more important than next year's profits. We have forecasts for AtkinsRéalis going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for AtkinsRéalis you should be aware 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.
