Tubacex, S.A. (BME:TUB) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

Tubacex, S.A. (BME:TUB) last week reported its latest second-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 were €73m, with Tubacex reporting some 9.3% below analyst expectations. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Tubacex

Taking into account the latest results, the current consensus from Tubacex's three analysts is for revenues of €430.5m in 2021, which would reflect a sizeable 20% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 39% to €0.20. Before this earnings announcement, the analysts had been modelling revenues of €491.2m and losses of €0.13 per share in 2021. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target was broadly unchanged at €1.70, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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 Tubacex analyst has a price target of €2.00 per share, while the most pessimistic values it at €1.30. 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.

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. For example, we noticed that Tubacex's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 44% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 0.1% a year over the past five years. What's also interesting is that our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue decline 3.1% annually for the foreseeable future. So it's pretty clear that Tubacex is expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider industry. The consensus price target held steady at €1.70, 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 Tubacex. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Tubacex analysts - going out to 2023, 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 Tubacex (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

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