Results: DEME Group NV Beat Earnings Expectations And Analysts Now Have New Forecasts

A week ago, DEME Group NV (EBR:DEME) came out with a strong set of full-year numbers that could potentially lead to a re-rate of the stock. The company beat forecasts, with revenue of €3.3b, some 9.6% above estimates, and statutory earnings per share (EPS) coming in at €6.43, 22% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for DEME Group

Following last week's earnings report, DEME Group's six analysts are forecasting 2024 revenues to be €3.37b, approximately in line with the last 12 months. Per-share earnings are expected to swell 17% to €7.54. Before this earnings report, the analysts had been forecasting revenues of €3.30b and earnings per share (EPS) of €7.08 in 2024. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

It will come as no surprise to learn that the analysts have increased their price target for DEME Group 8.8% to €150on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on DEME Group, with the most bullish analyst valuing it at €170 and the most bearish at €140 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting DEME Group is an easy business to forecast or the the analysts are all using similar assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that DEME Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.7% growth on an annualised basis. This is compared to a historical growth rate of 4.1% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that DEME Group is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around DEME Group's earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on DEME Group. Long-term earnings power is much more important than next year's profits. We have forecasts for DEME Group going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether DEME Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.