SGL Carbon SE Just Beat EPS By 121%: Here's What Analysts Think Will Happen Next

SGL Carbon SE (ETR:SGL) shareholders are probably feeling a little disappointed, since its shares fell 5.6% to €5.53 in the week after its latest annual results. It looks like a credible result overall - although revenues of €979m were what the analysts expected, SGL Carbon surprised by delivering a (statutory) profit of €0.62 per share, an impressive 121% above what was forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for SGL Carbon

Taking into account the latest results, the most recent consensus for SGL Carbon from five analysts is for revenues of €1.04b in 2022 which, if met, would be a credible 6.5% increase on its sales over the past 12 months. Earnings are expected to improve, with SGL Carbon forecast to report a statutory profit of €0.32 per share. In the lead-up to this report, the analysts had been modelling revenues of €1.04b and earnings per share (EPS) of €0.30 in 2022. So the consensus seems to have become somewhat more optimistic on SGL Carbon's earnings potential following these results.

There's been no major changes to the consensus price target of €7.33, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. There are some variant perceptions on SGL Carbon, with the most bullish analyst valuing it at €11.00 and the most bearish at €2.50 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SGL Carbon's past performance and to peers in the same industry. It's clear from the latest estimates that SGL Carbon's rate of growth is expected to accelerate meaningfully, with the forecast 6.5% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.7% p.a. 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 10% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, SGL Carbon is expected to grow slower 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 SGL Carbon following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at €7.33, with the latest estimates not enough to have an impact on their price targets.

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

And what about risks? Every company has them, and we've spotted 1 warning sign for SGL Carbon you should know about.

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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.