It's been a good week for Signify N.V. (AMS:LIGHT) shareholders, because the company has just released its latest third-quarter results, and the shares gained 3.4% to €28.06. The result was positive overall - although revenues of €1.9b were in line with what the analysts predicted, Signify surprised by delivering a statutory profit of €0.86 per share, modestly greater than expected. The 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 estimates suggest is in store for next year.
Following the latest results, Signify's 13 analysts are now forecasting revenues of €7.73b in 2023. This would be a satisfactory 2.4% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to crater 26% to €3.58 in the same period. Before this earnings report, the analysts had been forecasting revenues of €7.73b and earnings per share (EPS) of €3.60 in 2023. 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.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at €43.69. 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 Signify, with the most bullish analyst valuing it at €62.00 and the most bearish at €33.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Signify's rate of growth is expected to accelerate meaningfully, with the forecast 1.9% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 1.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 6.9% annually. So it's clear that despite the acceleration in growth, Signify is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Signify's revenues are expected to perform worse than the wider industry. The consensus price target held steady at €43.69, 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 Signify going out to 2024, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Signify (2 can't be ignored) you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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