Party Time: Brokers Just Made Major Increases To Their Salzgitter AG (ETR:SZG) Earnings Forecasts

Salzgitter AG (ETR:SZG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. Salzgitter has also found favour with investors, with the stock up a worthy 16% to €36.40 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After the upgrade, the consensus from Salzgitter's nine analysts is for revenues of €11b in 2023, which would reflect an uneasy 11% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to tumble 71% to €5.75 in the same period. Prior to this update, the analysts had been forecasting revenues of €10b and earnings per share (EPS) of €4.94 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Salzgitter

It will come as no surprise to learn that the analysts have increased their price target for Salzgitter 5.2% to €36.08 on the back of these upgrades. 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 Salzgitter analyst has a price target of €45.00 per share, while the most pessimistic values it at €26.60. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Salzgitter shareholders.

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. We would highlight that sales are expected to reverse, with a forecast 11% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 5.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 1.5% annually for the foreseeable future. The forecasts do look bearish for Salzgitter, since they're expecting it to shrink faster than the industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Notably, analysts also upgraded their revenue estimates, with sales performing well although Salzgitter's revenue growth is expected to trail that of the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Salzgitter could be worth investigating further.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Salzgitter analysts - going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.