Earnings Miss: freenet AG Missed EPS By 31% And Analysts Are Revising Their Forecasts

freenet AG (ETR:FNTN) missed earnings with its latest second-quarter results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at €559m, statutory earnings missed forecasts by an incredible 31%, coming in at just €0.38 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for freenet

Following the recent earnings report, the consensus from 13 analysts covering freenet is for revenues of €2.53b in 2024. This implies a noticeable 5.9% decline in revenue compared to the last 12 months. Per-share earnings are expected to increase 2.0% to €2.30. Yet prior to the latest earnings, the analysts had been anticipated revenues of €2.54b and earnings per share (EPS) of €2.28 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at €30.09. 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. There are some variant perceptions on freenet, with the most bullish analyst valuing it at €34.50 and the most bearish at €25.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the freenet's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that freenet's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 11% to the end of 2024. This tops off a historical decline of 2.2% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 3.6% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect freenet to suffer worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at €30.09, 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 freenet. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple freenet 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 freenet 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.