Shareholders of Cloetta AB (publ) (STO:CLA B) will be pleased this week, given that the stock price is up 15% to kr34.00 following its latest full-year results. Revenues were kr6.5b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of kr1.74 were also better than expected, beating analyst predictions by 10%. 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, Cloetta's two analysts currently expect revenues in 2020 to be kr6.58b, approximately in line with the last 12 months. Statutory earnings per share are expected to ascend 12% to kr1.94. Yet prior to the latest earnings, analysts had been forecasting revenues of kr6.55b and earnings per share (EPS) of kr1.86 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 8.8% to kr37.00, suggesting that higher earnings estimates flow through to the stock's valuation as well.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Cloetta's performance in recent years. It's pretty clear that analysts expect Cloetta's revenue growth will slow down substantially, with revenues next year expected to grow 1.4%, compared to a historical growth rate of 4.0% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 3.4% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Cloetta to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Cloetta's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
It might also be worth considering whether Cloetta's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.