Last week saw the newest yearly earnings release from Carlsberg A/S (CPH:CARL B), an important milestone in the company's journey to build a stronger business. Carlsberg reported ø66b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of ø43.70 beat expectations, being 6.1% higher than what analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from Carlsberg's 15 analysts is for revenues of ø67.6b in 2020, which would reflect a satisfactory 2.6% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to increase 3.4% to ø45.14. In the lead-up to this report, analysts had been modelling revenues of ø68.6b and earnings per share (EPS) of ø45.03 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of ø1,035, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Carlsberg, with the most bullish analyst valuing it at ø1,220 and the most bearish at ø800 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Carlsberg shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Carlsberg's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 2.6%, well above its historical decline of 0.6% a year over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 4.2% next year. So although Carlsberg's revenue growth is expected to improve, it is still expected to grow slower than the market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Carlsberg's revenues are expected to perform worse than the wider market. The consensus price target held steady at ø1,035, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Carlsberg going out to 2024, and you can see them free on our platform here.
You can also see whether Carlsberg is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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