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Results: PORR AG Exceeded Expectations And The Consensus Has Updated Its Estimates

Simply Wall St

One of the biggest stories of last week was how PORR AG (VIE:POS) shares plunged 24% in the week since its latest quarterly results, closing yesterday at €16.76. It looks to have been a bit of a mixed result. While revenues of €1.2b fell 11% short of what analysts had predicted, earnings per share (EPS) of €2.17 exceeded expectations by 5.6%. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings consensus estimates to see what could be in store for next year.

View our latest analysis for PORR

WBAG:POS Past and Future Earnings, December 1st 2019

After the latest results, the four analysts covering PORR are now predicting revenues of €5.04b in 2019. If met, this would reflect a satisfactory 3.9% improvement in sales compared to the last 12 months. Earnings per share are expected to plummet 49% to €0.84 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of €5.17b and earnings per share (EPS) of €2.42 in 2019. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share forecasts.

It'll come as no surprise then, to learn that analysts have cut their price target 10% to €24.68. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values PORR at €33.70 per share, while the most bearish prices it at €18.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Further, we can compare these estimates to past performance, and see how PORR forecasts compare to the wider market's forecast performance. We would highlight that PORR's revenue growth is expected to slow, with forecast 3.9% increase next year well below the historical 13%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.0% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkPORR will grow faster than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of PORR's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for PORR going out to 2023, and you can see them free on our platform here.

You can also view our analysis of PORR's balance sheet, and whether we think PORR is carrying too much debt, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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