It’s been a pretty great week for Burckhardt Compression Holding AG (VTX:BCHN) shareholders, with its shares surging 18% to CHF234 in the week since its latest annual results. Revenues came in 2.8% below expectations, at CHF630m. Statutory earnings per share were relatively better off, with a per-share profit of CHF9.56 being roughly in line with analyst estimates. 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, Burckhardt Compression Holding’s four analysts are now forecasting revenues of CHF693.2m in 2021. This would be a decent 10% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 19% to CHF11.35. Before this earnings report, the analysts had been forecasting revenues of CHF705.4m and earnings per share (EPS) of CHF12.58 in 2021. 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.
The average price target fell 9.4% to CHF258, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. Currently, the most bullish analyst values Burckhardt Compression Holding at CHF300 per share, while the most bearish prices it at CHF190. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Burckhardt Compression Holding shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Burckhardt Compression Holding’s growth to accelerate, with the forecast 10% growth ranking favourably alongside historical growth of 5.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Burckhardt Compression Holding to grow faster 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 Burckhardt Compression Holding. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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. At Simply Wall St, we have a full range of analyst estimates for Burckhardt Compression Holding going out to 2023, and you can see them free on our platform here..
However, before you get too enthused, we’ve discovered 3 warning signs for Burckhardt Compression Holding that you should be aware of.
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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. 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. Thank you for reading.