This Broker Just Slashed Their Schweizer Electronic AG (ETR:SCE) Earnings Forecasts

The analyst covering Schweizer Electronic AG (ETR:SCE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the solitary analyst covering Schweizer Electronic is now predicting revenues of €136m in 2022. If met, this would reflect a meaningful 14% improvement in sales compared to the last 12 months. Per-share losses are expected to creep up to €5.83. Yet before this consensus update, the analyst had been forecasting revenues of €185m and losses of €3.23 per share in 2022. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Schweizer Electronic

The consensus price target fell 29% to €10.00, implicitly signalling that lower earnings per share are a leading indicator for Schweizer Electronic's valuation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Schweizer Electronic is forecast to grow faster in the future than it has in the past, with revenues expected to display 11% annualised growth until the end of 2022. If achieved, this would be a much better result than the 2.4% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 11% annually. So while Schweizer Electronic's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Schweizer Electronic. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Schweizer Electronic.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Schweizer Electronic going out as far as 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.