One thing we could say about the analysts on Viscom AG (ETR:V6C) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the latest downgrade, the three analysts covering Viscom provided consensus estimates of €71m revenue in 2020, which would reflect a painful 20% decline on its sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of €0.073 per share in 2020. Prior to this update, the analysts had been forecasting revenues of €89m and earnings per share (EPS) of €0.40 in 2020. There looks to have been a major change in sentiment regarding Viscom's prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.
The consensus price target fell 8.0% to €8.67, implicitly signalling that lower earnings per share are a leading indicator for Viscom's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Viscom, with the most bullish analyst valuing it at €9.20 and the most bearish at €7.80 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 20%, a significant reduction from annual growth of 8.3% 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 9.4% annually for the foreseeable future. It's pretty clear that Viscom's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Viscom to become unprofitable this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Viscom's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Viscom.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Viscom analysts - going out to 2022, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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