ZEAL Network SE Just Missed EPS By 17%: Here's What Analysts Think Will Happen Next

It's shaping up to be a tough period for ZEAL Network SE (ETR:TIMA), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. ZEAL Network missed earnings this time around, with €84m revenue coming in 3.0% below what the analysts had modelled. Statutory earnings per share (EPS) of €0.48 also fell short of expectations by 17%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for ZEAL Network

Following the latest results, ZEAL Network's four analysts are now forecasting revenues of €104.0m in 2022. This would be a huge 24% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 43% to €0.69. Before this earnings report, the analysts had been forecasting revenues of €103.0m and earnings per share (EPS) of €0.89 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 large cut to EPS estimates.

It might be a surprise to learn that the consensus price target fell 6.1% to €51.00, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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. The most optimistic ZEAL Network analyst has a price target of €56.00 per share, while the most pessimistic values it at €47.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting ZEAL Network is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ZEAL Network's past performance and to peers in the same industry. For example, we noticed that ZEAL Network's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 24% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 9.7% 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 12% annually. So it looks like ZEAL Network is expected to grow faster than its competitors, at least for a while.

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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of ZEAL Network's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on ZEAL Network. Long-term earnings power is much more important than next year's profits. We have forecasts for ZEAL Network going out to 2024, and you can see them free on our platform here.

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

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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.