Bouygues SA (EPA:EN) last week reported its latest first-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was an okay result overall, with revenues coming in at €7.2b, roughly what the analysts had been expecting. 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. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus, from the 13 analysts covering Bouygues, is for revenues of €33.8b in 2020, which would reflect a considerable 9.3% reduction in Bouygues’ sales over the past 12 months. Statutory earnings per share are forecast to plunge 54% to €1.25 in the same period. Before this earnings report, the analysts had been forecasting revenues of €34.0b and earnings per share (EPS) of €1.59 in 2020. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
The consensus price target held steady at €33.66, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Bouygues, with the most bullish analyst valuing it at €41.00 and the most bearish at €18.80 per share. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 9.3%, a significant reduction from annual growth of 3.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.9% next year. It’s pretty clear that Bouygues’ revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Bouygues. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on Bouygues. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple Bouygues analysts – going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we’ve spotted with Bouygues .
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