Earnings Beat: BAUER Aktiengesellschaft Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a good week for BAUER Aktiengesellschaft (ETR:B5A) shareholders, because the company has just released its latest third-quarter results, and the shares gained 3.4% to €9.47. Revenues were €342m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at €0.15, an impressive 36% ahead of estimates. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for BAUER

Taking into account the latest results, the consensus forecast from BAUER's three analysts is for revenues of €1.45b in 2021, which would reflect an okay 6.6% improvement in sales compared to the last 12 months. Earnings are expected to improve, with BAUER forecast to report a statutory profit of €0.56 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.45b and earnings per share (EPS) of €0.91 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

The average price target fell 8.6% to €10.67, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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 BAUER analyst has a price target of €12.00 per share, while the most pessimistic values it at €10.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. The analysts are definitely expecting BAUER's growth to accelerate, with the forecast 6.6% growth ranking favourably alongside historical growth of 1.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.4% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that BAUER is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for BAUER. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 BAUER going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for BAUER that you should be aware of.

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