Wärtsilä Oyj Abp Just Beat EPS By 8.7%: Here's What Analysts Think Will Happen Next

It's been a good week for Wärtsilä Oyj Abp (HEL:WRT1V) shareholders, because the company has just released its latest second-quarter results, and the shares gained 3.7% to €19.15. The result was positive overall - although revenues of €1.6b were in line with what the analysts predicted, Wärtsilä Oyj Abp surprised by delivering a statutory profit of €0.20 per share, modestly greater than expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Wärtsilä Oyj Abp

Taking into account the latest results, the consensus forecast from Wärtsilä Oyj Abp's 16 analysts is for revenues of €6.67b in 2024. This reflects a meaningful 12% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 30% to €0.83. Before this earnings report, the analysts had been forecasting revenues of €6.67b and earnings per share (EPS) of €0.80 in 2024. So the consensus seems to have become somewhat more optimistic on Wärtsilä Oyj Abp's earnings potential following these results.

There's been no major changes to the consensus price target of €17.22, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Wärtsilä Oyj Abp at €22.00 per share, while the most bearish prices it at €9.60. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Wärtsilä Oyj Abp's rate of growth is expected to accelerate meaningfully, with the forecast 25% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.9% 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 3.1% 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at €17.22, 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 forecasts 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com