VERBUND AG Just Recorded A 13% Earnings Beat: Here's What Analysts Think
It's been a pretty great week for VERBUND AG (VIE:VER) shareholders, with its shares surging 14% to €37.78 in the week since its latest annual results. VERBUND beat revenue forecasts by a solid 13% to hit €3.9b. Statutory earnings per share came in at €1.60, in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for VERBUND
Following last week's earnings report, VERBUND's ten analysts are forecasting 2020 revenues to be €3.87b, approximately in line with the last 12 months. Per-share earnings are expected to expand 12% to €1.79. In the lead-up to this report, the analysts had been modelling revenues of €3.90b and earnings per share (EPS) of €1.98 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target fell 8.5% to €41.80, with the analysts clearly linking lower forecast earnings to the performance of the stock price. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values VERBUND at €52.40 per share, while the most bearish prices it at €26.90. 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. We would highlight that sales are expected to reverse, with the forecast 0.8% revenue decline a notable change from historical growth of 2.7% 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 2.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - VERBUND 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that VERBUND's revenues are expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple VERBUND analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - VERBUND has 1 warning sign we think you should be aware of.
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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