It's been a good week for Landis+Gyr Group AG (VTX:LAND) shareholders, because the company has just released its latest half-year results, and the shares gained 2.9% to CHF52.30. Revenues fell 6.8% short of expectations, at US$624m. Earnings correspondingly dipped, with Landis+Gyr Group reporting a statutory loss of US$0.07 per share, whereas the analysts had previously modelled a profit in this period. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the consensus from Landis+Gyr Group's seven analysts is for revenues of US$1.38b in 2021, which would reflect a small 5.6% decline in sales compared to the last year of performance. Statutory earnings per share are forecast to nosedive 63% to US$0.51 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.46b and earnings per share (EPS) of US$1.48 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.
The analysts made no major changes to their price target of US$68.86, suggesting the downgrades are not expected to have a long-term impact on Landis+Gyr Group's 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. There are some variant perceptions on Landis+Gyr Group, with the most bullish analyst valuing it at US$78.31 and the most bearish at US$50.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. Over the past three years, revenues have declined around 3.2% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 5.6% decline in revenue next year. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 8.0% next year. So while a broad number of companies are forecast to decline, unfortunately Landis+Gyr Group is expected to see its sales affected worse than other companies in the industry.
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. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 Simply Wall St, we have a full range of analyst estimates for Landis+Gyr Group going out to 2023, 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 2 warning signs with Landis+Gyr Group , and understanding them should be part of your investment process.
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