Metsä Board Oyj (HEL:METSB) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Metsä Board Oyj reported in line with analyst predictions, delivering revenues of €1.9b and statutory earnings per share of €0.41, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we’ve gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, Metsä Board Oyj’s seven analysts currently expect revenues in 2020 to be €1.93b, approximately in line with the last 12 months. Statutory earnings per share are expected to sink 12% to €0.36 in the same period. In the lead-up to this report, analysts had been modelling revenues of €1.94b and earnings per share (EPS) of €0.40 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.
The consensus price target held steady at €5.73, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. There are some variant perceptions on Metsä Board Oyj, with the most bullish analyst valuing it at €6.50 and the most bearish at €4.50 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Metsä Board Oyj’s past performance and to peers in the same market. One obvious concern is that although revenues are forecast to continue shrinking, the expected 1.1% decline next year is substantially more severe than the 0.8% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 0.5% per year. So it looks like Metsä Board Oyj is also expected to see its revenues decline at a faster rate than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Metsä Board Oyj’s revenues are expected to perform worse than the wider market. The consensus price target held steady at €5.73, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have forecasts for Metsä Board Oyj going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether Metsä Board Oyj’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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