Revenue Miss: Wärtsilä Oyj Abp Fell 18% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

It's shaping up to be a tough period for Wärtsilä Oyj Abp (HEL:WRT1V), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. It looks like a weak result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of €1.3b missed by 18%, and statutory earnings per share of €0.14 fell short of forecasts by 6.6%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Wärtsilä Oyj Abp

Taking into account the latest results, the most recent consensus for Wärtsilä Oyj Abp from 16 analysts is for revenues of €6.66b in 2024. If met, it would imply a meaningful 13% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 69% to €0.83. Yet prior to the latest earnings, the analysts had been anticipated revenues of €6.73b and earnings per share (EPS) of €0.77 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 9.5% to €15.61, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. Currently, the most bullish analyst values Wärtsilä Oyj Abp at €21.00 per share, while the most bearish prices it at €9.40. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Wärtsilä Oyj Abp's past performance and to peers in the same industry. It's clear from the latest estimates that Wärtsilä Oyj Abp's rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.2% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Wärtsilä Oyj Abp is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Wärtsilä Oyj Abp's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Wärtsilä Oyj Abp going out to 2026, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months 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.