UPM-Kymmene Oyj Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Investors in UPM-Kymmene Oyj (HEL:UPM) had a good week, as its shares rose 3.1% to close at €32.98 following the release of its first-quarter results. Revenues were €2.6b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at €0.51, an impressive 38% ahead of estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on UPM-Kymmene Oyj after the latest results.

Check out our latest analysis for UPM-Kymmene Oyj

Taking into account the latest results, the current consensus from UPM-Kymmene Oyj's 13 analysts is for revenues of €10.8b in 2024. This would reflect a reasonable 4.8% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 132% to €2.11. Before this earnings report, the analysts had been forecasting revenues of €10.8b and earnings per share (EPS) of €1.94 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at €35.26, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on UPM-Kymmene Oyj, with the most bullish analyst valuing it at €45.00 and the most bearish at €28.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that UPM-Kymmene Oyj's rate of growth is expected to accelerate meaningfully, with the forecast 6.5% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.8% 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 4.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that UPM-Kymmene Oyj 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 UPM-Kymmene Oyj'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. 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 UPM-Kymmene Oyj going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for UPM-Kymmene 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.