Forbo Holding AG Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for Forbo Holding AG (VTX:FORN) shareholders, because the company has just released its latest annual results, and the shares gained 4.1% to CHF1,634. It looks like a credible result overall - although revenues of CHF1.1b were in line with what the analysts predicted, Forbo Holding surprised by delivering a statutory profit of CHF66.60 per share, a notable 11% above expectations. 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. 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 Forbo Holding

After the latest results, the seven analysts covering Forbo Holding are now predicting revenues of CHF1.19b in 2021. If met, this would reflect a reasonable 6.3% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 7.0% to CHF71.27. In the lead-up to this report, the analysts had been modelling revenues of CHF1.19b and earnings per share (EPS) of CHF75.42 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

Despite cutting their earnings forecasts,the analysts have lifted their price target 5.7% to CHF1,619, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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. The most optimistic Forbo Holding analyst has a price target of CHF1,825 per share, while the most pessimistic values it at CHF1,500. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. The analysts are definitely expecting Forbo Holding's growth to accelerate, with the forecast 6.3% annualised growth to the end of 2021 ranking favourably alongside historical growth of 0.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 7.9% annually. So it's clear that despite the acceleration in growth, Forbo Holding is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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 also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Forbo Holding analysts - going out to 2024, and you can see them free on our platform here.

You can also see our analysis of Forbo Holding's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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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