Need To Know: Analysts Just Made A Substantial Cut To Their SMT Scharf AG (ETR:S4AA) Estimates

The analysts covering SMT Scharf AG (ETR:S4AA) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the consensus from dual analysts covering SMT Scharf is for revenues of €73m in 2023, implying a concerning 20% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to dive 83% to €0.16 in the same period. Previously, the analysts had been modelling revenues of €88m and earnings per share (EPS) of €0.99 in 2023. Indeed, we can see that the analysts are a lot more bearish about SMT Scharf's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for SMT Scharf

The consensus price target fell 8.1% to €14.25, with the weaker earnings outlook clearly leading analyst valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 20% by the end of 2023. This indicates a significant reduction from annual growth of 7.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.5% per year. It's pretty clear that SMT Scharf's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for SMT Scharf. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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