Analysts Just Slashed Their Friedrich Vorwerk Group SE (FRA:VH2) EPS Numbers

One thing we could say about the analysts on Friedrich Vorwerk Group SE (FRA:VH2) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the four analysts covering Friedrich Vorwerk Group, is for revenues of €320m in 2023, which would reflect a perceptible 4.5% reduction in Friedrich Vorwerk Group's sales over the past 12 months. Statutory earnings per share are supposed to plunge 28% to €0.99 in the same period. Prior to this update, the analysts had been forecasting revenues of €365m and earnings per share (EPS) of €1.68 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for Friedrich Vorwerk Group

It'll come as no surprise then, to learn that the analysts have cut their price target 39% to €24.25. 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 Friedrich Vorwerk Group at €42.00 per share, while the most bearish prices it at €14.00. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from 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 Friedrich Vorwerk Group's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 3.6% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 14% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.5% annually for the foreseeable future. It's pretty clear that Friedrich Vorwerk Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Friedrich Vorwerk Group's revenues are expected to grow 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.

That said, the analysts might have good reason to be negative on Friedrich Vorwerk Group, given concerns around earnings quality. For more information, you can click here to discover this and the 1 other concern we've identified.

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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.