Earnings Miss: Kesko Oyj Missed EPS By 14% And Analysts Are Revising Their Forecasts

Last week, you might have seen that Kesko Oyj (HEL:KESKOB) released its first-quarter result to the market. The early response was not positive, with shares down 2.9% to €16.06 in the past week. It was not a great result overall. While revenues of €2.8b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 14% to hit €0.15 per share. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Kesko Oyj

Taking into account the latest results, Kesko Oyj's six analysts currently expect revenues in 2024 to be €11.8b, approximately in line with the last 12 months. Statutory earnings per share are expected to reduce 5.4% to €1.12 in the same period. In the lead-up to this report, the analysts had been modelling revenues of €11.8b and earnings per share (EPS) of €1.16 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at €17.16, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Kesko Oyj analyst has a price target of €19.60 per share, while the most pessimistic values it at €13.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Kesko Oyj shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kesko Oyj's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Kesko Oyj's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.0% growth on an annualised basis. This is compared to a historical growth rate of 2.9% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.7% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Kesko Oyj.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Kesko Oyj's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Kesko Oyj going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Kesko Oyj that 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.