Traton SE (ETR:8TRA) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 3.0% to hit €6.3b. Traton also reported a profit of €0.86, which was an impressive 38% above what analysts had forecast. 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 forecasts to see whether analysts have changed their earnings models, following these results.
Following the recent earnings report, the consensus fromten analysts covering Traton expects revenues of €26b in 2020, implying a small 2.4% decline in sales compared to the last 12 months. Earnings per share are forecast to tumble 98% to €2.66 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of €27b and earnings per share (EPS) of €2.77 in 2020. 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 analysts did make a small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at €27.40, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Traton, with the most bullish analyst valuing it at €36.00 and the most bearish at €24.00 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.
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 analysts are more or less bullish relative to other companies in the market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.4% a significant reduction from annual growth of 7.4% over the last three years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.0% next year. It’s pretty clear that Traton’s revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Traton’s revenues are expected to perform worse than the wider market. 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.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Traton analysts – going out to 2023, and you can see them free on our platform here.
It might also be worth considering whether Traton’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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