Purmo Group Oyj Just Recorded A 129% EPS Beat: Here's What Analysts Are Forecasting Next

It's been a good week for Purmo Group Oyj (HEL:PURMO) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.8% to €8.70. Revenues were €212m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at €0.16, an impressive 129% ahead of estimates. 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 Purmo Group Oyj after the latest results.

View our latest analysis for Purmo Group Oyj

After the latest results, the consensus from Purmo Group Oyj's three analysts is for revenues of €803.0m in 2023, which would reflect an uncomfortable 8.7% decline in sales compared to the last year of performance. Statutory earnings per share are forecast to crater 92% to €0.024 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €838.3m and earnings per share (EPS) of €0.024 in 2023. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

The consensus has reconfirmed its price target of €9.83, showing that the analysts don't expect weaker sales expectations next year to have a material impact on Purmo Group Oyj's market value. 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. The most optimistic Purmo Group Oyj analyst has a price target of €11.00 per share, while the most pessimistic values it at €9.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that Purmo Group Oyj's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 11% to the end of 2023. This tops off a historical decline of 1.1% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.0% per year. So while a broad number of companies are forecast to grow, unfortunately Purmo Group Oyj is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. With that said, earnings are more important to the long-term value of the business. The consensus price target held steady at €9.83, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Purmo Group Oyj going out to 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Purmo Group Oyj you should be aware of.

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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.