It's been a good week for Ringkjøbing Landbobank A/S (CPH:RILBA) shareholders, because the company has just released its latest full-year results, and the shares gained 2.2% to ø512. Results look mixed - while revenue fell marginally short of analyst estimates at ø2.1b, statutory earnings were in line with expectations, at ø33.50 per share. 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 gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Following the latest results, Ringkjøbing Landbobank's three analysts are now forecasting revenues of ø2.20b in 2020. This would be a satisfactory 7.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 8.5% to ø35.91. Yet prior to the latest earnings, analysts had been forecasting revenues of ø2.18b and earnings per share (EPS) of ø35.66 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The consensus price target rose 6.4% to ø498 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of Ringkjøbing Landbobank's earnings by assigning a price premium. 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. The most optimistic Ringkjøbing Landbobank analyst has a price target of ø575 per share, while the most pessimistic values it at ø420. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's pretty clear that analysts expect Ringkjøbing Landbobank's revenue growth will slow down substantially, with revenues next year expected to grow 7.3%, compared to a historical growth rate of 19% over the past five years. Compare this with other companies in the same market, which are forecast to see a revenue decline of 0.2% next year. Factoring in the forecast slowdown in growth, it's pretty clear that Ringkjøbing Landbobank is still expected to grow faster than the wider 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. The consensus also reconfirmed their revenue estimates, suggesting that sales are performing in line with expectations. Plus, our data suggests that Ringkjøbing Landbobank is expected to grow faster 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.
Still, 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 Ringkjøbing Landbobank going out to 2022, and you can see them free on our platform here..
It might also be worth considering whether Ringkjøbing Landbobank's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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