Vestas Wind Systems A/S Just Missed Earnings; Here's What Analysts Are Forecasting Now

Vestas Wind Systems A/S (CPH:VWS) last week reported its latest first-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues missed expectations, with revenue of €2.7b falling 11% short of forecasts. Earnings correspondingly dipped, with Vestas Wind Systems reporting a statutory loss of €0.07 per share, where the analysts were expecting a profit. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Vestas Wind Systems

Following the latest results, Vestas Wind Systems' 25 analysts are now forecasting revenues of €17.2b in 2024. This would be a solid 13% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Vestas Wind Systems forecast to report a statutory profit of €0.56 per share. In the lead-up to this report, the analysts had been modelling revenues of €17.3b and earnings per share (EPS) of €0.58 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr.223, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Vestas Wind Systems analyst has a price target of kr.315 per share, while the most pessimistic values it at kr.99.02. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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. The analysts are definitely expecting Vestas Wind Systems' growth to accelerate, with the forecast 18% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Vestas Wind Systems is expected to grow much faster than its industry.

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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is 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 Vestas Wind Systems. Long-term earnings power is much more important than next year's profits. We have forecasts for Vestas Wind Systems going out to 2026, and you can see them free on our platform here.

You can also see whether Vestas Wind Systems is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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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.