SFS Group AG Just Beat EPS By 10%: Here's What Analysts Think Will Happen Next

A week ago, SFS Group AG (VTX:SFSN) came out with a strong set of yearly numbers that could potentially lead to a re-rate of the stock. SFS Group beat earnings, with revenues hitting CHF1.7b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 10%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for SFS Group

Taking into account the latest results, the consensus forecast from SFS Group's seven analysts is for revenues of CHF1.78b in 2021, which would reflect a reasonable 3.3% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dip 3.4% to CHF4.74 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CHF1.78b and earnings per share (EPS) of CHF4.71 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of CHF106, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on SFS Group, with the most bullish analyst valuing it at CHF127 and the most bearish at CHF60.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. We would highlight that SFS Group's revenue growth is expected to slow, with the forecast 3.3% annualised growth rate until the end of 2021 being well below the historical 5.2% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.6% annually. Factoring in the forecast slowdown in growth, it seems obvious that SFS Group is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple SFS Group analysts - going out to 2023, and you can see them free on our platform here.

Even so, be aware that SFS Group is showing 1 warning sign in our investment analysis , you should know about...

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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. 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.
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