Metro AG Just Missed Earnings; Here's What Analysts Are Forecasting Now

There's been a notable change in appetite for Metro AG (ETR:B4B) shares in the week since its annual report, with the stock down 12% to €9.35. Revenues came in at €25b, in line with estimates, while Metro reported a statutory loss of €0.15 per share, well short of prior analyst forecasts for a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Metro

Taking into account the latest results, the most recent consensus for Metro from nine analysts is for revenues of €26.0b in 2022 which, if met, would be an okay 5.0% increase on its sales over the past 12 months. Metro is also expected to turn profitable, with statutory earnings of €0.33 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of €25.9b and earnings per share (EPS) of €0.50 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at €10.56, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values Metro at €16.20 per share, while the most bearish prices it at €6.10. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Metro's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 5.0% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 8.2% a year 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 6.4% annually for the foreseeable future. So although Metro's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Metro's revenues are expected to perform worse than the wider industry. The consensus price target held steady at €10.56, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple Metro analysts - going out to 2024, and you can see them free on our platform here.

It might also be worth considering whether Metro's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.