Salzgitter AG (ETR:SZG) Analysts Just Trimmed Their Revenue Forecasts By 10%

Market forces rained on the parade of Salzgitter AG (ETR:SZG) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following this downgrade, Salzgitter's ten analysts are forecasting 2022 revenues to be €11b, approximately in line with the last 12 months. Statutory earnings per share are presumed to accumulate 4.4% to €16.87. Previously, the analysts had been modelling revenues of €12b and earnings per share (EPS) of €17.22 in 2022. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

View our latest analysis for Salzgitter

Despite the cuts to forecast earnings, there was no real change to the €39.66 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic Salzgitter analyst has a price target of €55.00 per share, while the most pessimistic values it at €22.00. 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.

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 also point out that the forecast 0.3% annualised revenue decline to the end of 2022 is roughly in line with the historical trend, which saw revenues shrink 0.4% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 2.9% per year. So it's pretty clear that, although revenues are shrinking, at least Salzgitter'srevenues are expected to decline at a slower rate 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, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Salzgitter after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Salzgitter, including concerns around earnings quality. Learn more, and discover the 2 other warning signs we've identified, for 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 downgrading 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.