Investors in Interpump Group S.p.A. (BIT:IP) had a good week, as its shares rose 4.0% to close at €28.00 following the release of its quarterly results. Interpump Group reported €344m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of €1.69 beat expectations, being 9.0% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, Interpump Group's four analysts are forecasting 2020 revenues to be €1.35b, approximately in line with the last 12 months. Statutory earnings per share are forecast to dive 25% to €1.19 in the same period. Before this earnings report, the analysts had been forecasting revenues of €1.38b and earnings per share (EPS) of €1.32 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a substantial drop in earnings per share numbers.
The analysts made no major changes to their price target of €29.66, suggesting the downgrades are not expected to have a long-term impact on Interpump Group'svaluation. 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. Currently, the most bullish analyst values Interpump Group at €31.30 per share, while the most bearish prices it at €25.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. We would highlight that sales are expected to reverse, with the forecast 1.5% revenue decline a notable change from historical growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Interpump Group is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at €29.66, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Interpump Group going out to 2022, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Interpump Group that you should be aware of.
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