It’s been a good week for Demant A/S (CPH:DEMANT) shareholders, because the company has just released its latest annual results, and the shares gained 2.2% to ø228. Revenues of ø15b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at ø6.00, missing estimates by 2.9%. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on Demant after the latest results.
View our latest analysis for Demant
Taking into account the latest results, the most recent consensus for Demant from 18 analysts is for revenues of ø17.2b in 2020, which is a meaningful 15% increase on its sales over the past 12 months. Statutory earnings per share are expected to surge 47% to ø8.81. Yet prior to the latest earnings, analysts had been forecasting revenues of ø17.2b and earnings per share (EPS) of ø8.62 in 2020. So the consensus seems to have become somewhat more optimistic on Demant’s earnings potential following these results.
There’s been no major changes to the consensus price target of ø219, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s valuation. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Demant analyst has a price target of ø280 per share, while the most pessimistic values it at ø150. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Demant’s past performance and to peers in the same market. It’s clear from the latest estimates that Demant’s rate of growth is expected to accelerate meaningfully, with forecast 15% revenue growth noticeably faster than its historical growth of 9.1%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 8.5% next year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Demant is expected to grow much faster than its market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Demant’s earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – and our data does suggest that Demant’s revenues are expected to grow faster than the wider market. The consensus price target held steady at ø219, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Demant going out to 2024, and you can see them free on our platform here..
You can also see whether Demant is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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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