Investors in Polytec Holding AG (VIE:PYT) had a good week, as its shares rose 9.6% to close at €8.99 following the release of its quarterly results. Revenues of €161m were in line with forecasts, although earnings per share (EPS) came in below expectations at €0.27, missing estimates by 3.6%. 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. We thought readers would find it interesting to see analysts’ latest post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from Polytec Holding’s twin analysts is for revenues of €650m in 2019, which would reflect a credible 2.4% improvement in sales compared to the last 12 months. Earnings per share are expected to increase 5.6% to €1.02. Before this earnings report, analysts had been forecasting revenues of €641m and earnings per share (EPS) of €1.17 in 2019. So there’s definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at €11.43, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation.
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. It’s pretty clear that analysts expect Polytec Holding’s revenue growth will slow down substantially, with revenues next year expected to grow 2.4%, compared to a historical growth rate of 4.0% over the past five years. By way of comparison, the 55 other companies in this market with analyst coverage, are forecast to grow their revenue at 3.7% per year. So it’s pretty clear that, while revenue growth is expected to slow down, analysts also expect the wider market to grow faster than Polytec Holding.
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 Polytec Holding’s revenues are expected to perform worse than the wider market. 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 said, the long-term trajectory of the company’s earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
You can also see whether Polytec Holding is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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