Results: Gesco AG Beat Earnings Expectations And Analysts Now Have New Forecasts

Investors in Gesco AG (ETR:GSC1) had a good week, as its shares rose 7.8% to close at €24.90 following the release of its full-year results. The result was positive overall - although revenues of €489m were in line with what the analysts predicted, Gesco surprised by delivering a statutory profit of €2.48 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Gesco

After the latest results, the four analysts covering Gesco are now predicting revenues of €564.8m in 2022. If met, this would reflect a decent 16% improvement in sales compared to the last 12 months. Per-share earnings are expected to climb 11% to €2.74. Before this earnings report, the analysts had been forecasting revenues of €524.1m and earnings per share (EPS) of €2.50 in 2022. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 7.5% to €40.13per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Gesco, with the most bullish analyst valuing it at €50.00 and the most bearish at €32.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Gesco is forecast to grow faster in the future than it has in the past, with revenues expected to display 16% annualised growth until the end of 2022. If achieved, this would be a much better result than the 4.6% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 6.5% annually. Not only are Gesco's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Gesco following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Gesco going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - Gesco 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.