Ferrovial SE Just Beat EPS By 55%: Here's What Analysts Think Will Happen Next

Ferrovial SE (BME:FER) just released its latest yearly results and things are looking bullish. The company beat forecasts, with revenue of €8.5b, some 2.1% above estimates, and statutory earnings per share (EPS) coming in at €0.62, 55% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Ferrovial after the latest results.

Check out our latest analysis for Ferrovial

After the latest results, the 16 analysts covering Ferrovial are now predicting revenues of €8.77b in 2024. If met, this would reflect a satisfactory 3.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 10.0% to €0.66. Yet prior to the latest earnings, the analysts had been anticipated revenues of €8.78b and earnings per share (EPS) of €0.63 in 2024. So the consensus seems to have become somewhat more optimistic on Ferrovial's earnings potential following these results.

There's been no major changes to the consensus price target of €37.03, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Ferrovial, with the most bullish analyst valuing it at €44.00 and the most bearish at €21.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Ferrovial's revenue growth is expected to slow, with the forecast 3.0% annualised growth rate until the end of 2024 being well below the historical 9.0% p.a. growth over the last five years. Compare this to the 12 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 3.2% per year. So it's pretty clear that, while Ferrovial's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Ferrovial's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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.

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 Ferrovial analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Ferrovial (at least 1 which is a bit unpleasant) , and understanding these should be part of your investment process.

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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.