Terveystalo Oyj (HEL:TTALO) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a credible result overall - although revenues of €240m were what the analysts expected, Terveystalo Oyj surprised by delivering a (statutory) profit of €0.13 per share, an impressive 30% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Terveystalo Oyj's six analysts are now forecasting revenues of €1.05b in 2021. This would be a satisfactory 7.1% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 69% to €0.52. Before this earnings report, the analysts had been forecasting revenues of €1.06b and earnings per share (EPS) of €0.52 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at €11.25. 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 Terveystalo Oyj analyst has a price target of €12.30 per share, while the most pessimistic values it at €9.80. This is a very narrow spread of estimates, implying either that Terveystalo Oyj is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Terveystalo Oyj's revenue growth is expected to slow, with forecast 7.1% increase next year well below the historical 16%p.a. growth over the last five years. Compare this to the 77 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.2% per year. So it's pretty clear that, while Terveystalo Oyj's revenue growth is expected to slow, it's expected to grow roughly in line with 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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 in mind, we wouldn't be too quick to come to a conclusion on Terveystalo Oyj. Long-term earnings power is much more important than next year's profits. We have forecasts for Terveystalo Oyj going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Terveystalo Oyj , and understanding these should be part of your investment process.
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