Cherry AG Just Missed EPS By 23%: Here's What Analysts Think Will Happen Next

It's been a sad week for Cherry AG (ETR:C3RY), who've watched their investment drop 15% to €15.14 in the week since the company reported its full-year result. Statutory earnings per share fell badly short of expectations, coming in at €0.42, some 23% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at €169m. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Cherry

Taking into account the latest results, the current consensus from Cherry's three analysts is for revenues of €190.5m in 2022, which would reflect a meaningful 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 109% to €0.80. Yet prior to the latest earnings, the analysts had been anticipated revenues of €194.8m and earnings per share (EPS) of €1.13 in 2022. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the €37.33 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Cherry at €40.00 per share, while the most bearish prices it at €33.00. This is a very narrow spread of estimates, implying either that Cherry is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that Cherry's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2022 being well below the historical 365% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.2% annually. So it's pretty clear that, while Cherry's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that Cherry's revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Cherry. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Cherry analysts - going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Cherry that you should be aware 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.