WashTec AG Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that WashTec AG (ETR:WSU) filed its yearly result this time last week. The early response was not positive, with shares down 2.5% to €48.15 in the past week. Revenues were €379m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of €0.99 were also better than expected, beating analyst predictions by 14%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on WashTec after the latest results.

View our latest analysis for WashTec

Taking into account the latest results, the current consensus from WashTec's four analysts is for revenues of €398.6m in 2021, which would reflect a credible 5.2% increase on its sales over the past 12 months. Per-share earnings are expected to soar 91% to €1.90. Before this earnings report, the analysts had been forecasting revenues of €397.6m and earnings per share (EPS) of €1.66 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice gain to earnings per share expectations following these results.

The consensus price target was unchanged at €48.88, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values WashTec at €62.50 per share, while the most bearish prices it at €29.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting WashTec's growth to accelerate, with the forecast 5.2% annualised growth to the end of 2021 ranking favourably alongside historical growth of 3.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 6.7% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, WashTec 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 WashTec 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 €48.88, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on WashTec. Long-term earnings power is much more important than next year's profits. We have forecasts for WashTec going out to 2025, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for WashTec that you need to take into consideration.

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This article by Simply Wall St is general in nature. 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.
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