Stratec SE Just Missed EPS By 24%: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that Stratec SE (ETR:SBS) filed its yearly result this time last week. The early response was not positive, with shares down 5.7% to €40.20 in the past week. Statutory earnings per share fell badly short of expectations, coming in at €1.07, some 24% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at €262m. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Stratec after the latest results.

View our latest analysis for Stratec

Taking into account the latest results, the current consensus from Stratec's six analysts is for revenues of €290.0m in 2024. This would reflect a decent 11% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 118% to €2.34. In the lead-up to this report, the analysts had been modelling revenues of €281.3m and earnings per share (EPS) of €2.04 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a substantial gain in earnings per share in particular.

Despite these upgrades, the consensus price target fell 6.1% to €49.00, perhaps signalling that the uplift in performance is not expected to last. 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. There are some variant perceptions on Stratec, with the most bullish analyst valuing it at €58.00 and the most bearish at €40.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Stratec's rate of growth is expected to accelerate meaningfully, with the forecast 11% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.5% 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 6.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Stratec is expected to grow much faster than its 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 Stratec following these results. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Stratec. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Stratec analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Stratec , and understanding it should be part of your investment process.

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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.