Bullish: Analysts Just Made A Decent Upgrade To Their Klöckner & Co SE (ETR:KCO) Forecasts

Klöckner & Co SE (ETR:KCO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

Following the upgrade, the latest consensus from Klöckner & Co's six analysts is for revenues of €9.0b in 2022, which would reflect a modest 7.2% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to dive 64% to €2.52 in the same period. Prior to this update, the analysts had been forecasting revenues of €7.9b and earnings per share (EPS) of €2.19 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Klöckner & Co

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of €14.10, suggesting that the forecast performance does not have a long term impact on the company'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. Currently, the most bullish analyst values Klöckner & Co at €17.80 per share, while the most bearish prices it at €9.90. 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 forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Klöckner & Co's growth to accelerate, with the forecast 9.7% annualised growth to the end of 2022 ranking favourably alongside historical growth of 1.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Klöckner & Co to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Klöckner & Co could be a good candidate for more research.

Analysts are definitely bullish on Klöckner & Co, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including concerns around earnings quality. You can learn more, and discover the 1 other warning sign we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.