Shareholders might have noticed that ALK-Abelló A/S (CPH:ALK B) filed its quarterly result this time last week. The early response was not positive, with shares down 8.1% to kr.2,084 in the past week. Revenues of kr.772m came in a modest 4.2% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of kr.1.80 coming in a substantial 53% smaller than what the analysts had expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from ALK-Abelló's four analysts is for revenues of kr.3.95b in 2021, which would reflect a solid 17% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 224% to kr.12.70. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr.3.99b and earnings per share (EPS) of kr.13.29 in 2021. 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.
The consensus price target held steady at kr.2,256, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values ALK-Abelló at kr.2,425 per share, while the most bearish prices it at kr.1,910. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that ALK-Abelló's rate of growth is expected to accelerate meaningfully, with the forecast 17% revenue growth noticeably faster than its historical growth of 4.4%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.4% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that ALK-Abelló is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ALK-Abelló. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple ALK-Abelló analysts - going out to 2024, and you can see them free on our platform here.
You can also view our analysis of ALK-Abelló's balance sheet, and whether we think ALK-Abelló is carrying too much debt, for free on our platform here.
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