Things Look Grim For Cargotec Corporation (HEL:CGCBV) After Today's Downgrade

One thing we could say about the analysts on Cargotec Corporation (HEL:CGCBV) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the three analysts covering Cargotec, is for revenues of €2.4b in 2024, which would reflect a painful 47% reduction in Cargotec's sales over the past 12 months. Statutory earnings per share are anticipated to plunge 39% to €3.54 in the same period. Previously, the analysts had been modelling revenues of €4.2b and earnings per share (EPS) of €4.57 in 2024. Indeed, we can see that the analysts are a lot more bearish about Cargotec's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Cargotec

What's most unexpected is that the consensus price target rose 5.1% to €82.25, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 57% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 5.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.8% per year. It's pretty clear that Cargotec's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Cargotec's revenues are expected to grow slower than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Cargotec.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Cargotec analysts - going out to 2026, and you can see them 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.

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