thyssenkrupp AG Reported A Surprise Loss, And Analysts Have Updated Their Forecasts

It's been a sad week for thyssenkrupp AG (ETR:TKA), who've watched their investment drop 14% to €4.76 in the week since the company reported its first-quarter result. It looks like a pretty bad result, given that revenues fell 10% short of analyst estimates at €8.2b, and the company reported a statutory loss of €0.50 per share instead of the profit that the analysts had been forecasting. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for thyssenkrupp

Taking into account the latest results, thyssenkrupp's seven analysts currently expect revenues in 2024 to be €36.3b, approximately in line with the last 12 months. Earnings are expected to improve, with thyssenkrupp forecast to report a statutory profit of €0.49 per share. Before this earnings report, the analysts had been forecasting revenues of €36.6b and earnings per share (EPS) of €0.78 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target fell 5.4% to €8.68, 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. There are some variant perceptions on thyssenkrupp, with the most bullish analyst valuing it at €16.00 and the most bearish at €4.90 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 1.3% by the end of 2024. This indicates a significant reduction from annual growth of 2.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.2% per year. It's pretty clear that thyssenkrupp's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for thyssenkrupp. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that thyssenkrupp's revenue is expected to perform worse 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 thyssenkrupp's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple thyssenkrupp analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for thyssenkrupp that you need to be mindful of.

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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.