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

Shareholders of ElringKlinger AG (ETR:ZIL2) will be pleased this week, given that the stock price is up 14% to €6.07 following its latest annual results. It looks like a credible result overall - although revenues of €1.8b were what the analysts expected, ElringKlinger surprised by delivering a (statutory) profit of €0.62 per share, an impressive 22% above what was forecast. 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 ElringKlinger

Following last week's earnings report, ElringKlinger's six analysts are forecasting 2024 revenues to be €1.88b, approximately in line with the last 12 months. Per-share earnings are expected to expand 15% to €0.71. In the lead-up to this report, the analysts had been modelling revenues of €1.86b and earnings per share (EPS) of €0.67 in 2024. So the consensus seems to have become somewhat more optimistic on ElringKlinger's earnings potential following these results.

The consensus price target was unchanged at €7.30, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values ElringKlinger at €12.00 per share, while the most bearish prices it at €4.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ElringKlinger's past performance and to peers in the same industry. It's pretty clear that there is an expectation that ElringKlinger's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.7% growth on an annualised basis. This is compared to a historical growth rate of 2.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.1% annually. Factoring in the forecast slowdown in growth, it seems obvious that ElringKlinger 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 ElringKlinger's earnings potential next year. 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 €7.30, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for ElringKlinger going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - ElringKlinger has 1 warning sign we think you should be aware of.

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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.