SMA Solar Technology AG Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

SMA Solar Technology AG (ETR:S92) just released its latest quarterly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.6% to hit €398m. SMA Solar Technology also reported a statutory profit of €0.45, which was an impressive 96% above what the analysts had forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on SMA Solar Technology after the latest results.

View our latest analysis for SMA Solar Technology

Following the recent earnings report, the consensus from six analysts covering SMA Solar Technology is for revenues of €1.63b in 2024. This implies a considerable 13% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to dive 70% to €1.42 in the same period. Before this earnings report, the analysts had been forecasting revenues of €1.64b and earnings per share (EPS) of €1.34 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at €31.67, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 SMA Solar Technology, with the most bullish analyst valuing it at €40.00 and the most bearish at €27.00 per share. 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 SMA Solar Technology shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 25% by the end of 2024. This indicates a significant reduction from annual growth of 16% 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 8.6% per year. It's pretty clear that SMA Solar Technology's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around SMA Solar Technology's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that SMA Solar Technology's revenue is expected to perform worse than the wider industry. The consensus price target held steady at €31.67, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on SMA Solar Technology. Long-term earnings power is much more important than next year's profits. We have forecasts for SMA Solar Technology 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 3 warning signs for SMA Solar Technology (2 are a bit unpleasant!) 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.