Earnings Miss: Neste Oyj Missed EPS By 60% And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on Neste Oyj (HEL:NESTE), given that the company fell short of expectations when it released its quarterly results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at €4.8b, statutory earnings missed forecasts by an incredible 60%, coming in at just €0.21 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Neste Oyj

Taking into account the latest results, the current consensus, from the 16 analysts covering Neste Oyj, is for revenues of €21.2b in 2024. This implies a measurable 5.5% reduction in Neste Oyj's revenue over the past 12 months. Per-share earnings are expected to accumulate 7.1% to €1.89. In the lead-up to this report, the analysts had been modelling revenues of €21.4b and earnings per share (EPS) of €2.10 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The average price target fell 5.5% to €34.13, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. Currently, the most bullish analyst values Neste Oyj at €45.00 per share, while the most bearish prices it at €22.00. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 7.3% by the end of 2024. This indicates a significant reduction from annual growth of 17% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 1.7% annually for the foreseeable future. So it's pretty clear that Neste Oyj's revenues are expected to shrink faster than the wider industry.

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. They also made no changes to their revenue estimates, implying the business is not expected to experience any major impacts to the current trajectory in the near term, even though it is expected to trail the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Neste Oyj's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Neste Oyj. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Neste Oyj going out to 2026, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for Neste Oyj that you need to take into consideration.

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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.