Ørsted A/S Just Missed EPS By 93%: Here's What Analysts Think Will Happen Next

Ørsted A/S (CPH:ORSTED) missed earnings with its latest half-year results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at kr.26b, statutory earnings missed forecasts by an incredible 93%, coming in at just kr.0.30 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Ørsted

Taking into account the latest results, the current consensus, from the 16 analysts covering Ørsted, is for revenues of kr.80.4b in 2022, which would reflect a stressful 24% reduction in Ørsted's sales over the past 12 months. Statutory earnings per share are predicted to leap 97% to kr.42.33. In the lead-up to this report, the analysts had been modelling revenues of kr.78.0b and earnings per share (EPS) of kr.37.39 in 2022. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of kr.887, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Ørsted, with the most bullish analyst valuing it at kr.1,050 and the most bearish at kr.610 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 42% by the end of 2022. This indicates a significant reduction from annual growth of 4.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 1.0% annually for the foreseeable future. It's pretty clear that Ørsted's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ørsted following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at kr.887, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Ørsted analysts - going out to 2024, and you can see them free on our platform here.

Plus, you should also learn about the 5 warning signs we've spotted with Ørsted (including 3 which don't sit too well with us) .

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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.