Earnings Beat: Rieter Holding AG Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a pretty great week for Rieter Holding AG (VTX:RIEN) shareholders, with its shares surging 13% to CHF113 in the week since its latest annual results. The result was positive overall - although revenues of CHF1.4b were in line with what the analysts predicted, Rieter Holding surprised by delivering a statutory profit of CHF16.47 per share, modestly greater than expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Rieter Holding

Taking into account the latest results, the current consensus, from the four analysts covering Rieter Holding, is for revenues of CHF1.03b in 2024. This implies a concerning 27% reduction in Rieter Holding's revenue over the past 12 months. Statutory earnings per share are expected to plunge 71% to CHF4.70 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CHF1.04b and earnings per share (EPS) of CHF5.05 in 2024. The 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 numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at CHF103, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. Currently, the most bullish analyst values Rieter Holding at CHF111 per share, while the most bearish prices it at CHF93.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 27% by the end of 2024. This indicates a significant reduction from annual growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Rieter Holding is expected to lag 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 Rieter Holding. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CHF103, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Rieter Holding. Long-term earnings power is much more important than next year's profits. We have forecasts for Rieter Holding going out to 2025, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with Rieter Holding (at least 1 which shouldn't be ignored) , and understanding these should be part of your investment process.

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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.