Earnings Release: Here's Why Analysts Cut Their Ilkka-Yhtymä Oyj (HEL:ILK2S) Price Target To €5.00

Ilkka-Yhtymä Oyj (HEL:ILK2S) shareholders are probably feeling a little disappointed, since its shares fell 2.6% to €4.52 in the week after its latest yearly results. Overall the results were a little better than the analyst was expecting, with revenues beating forecasts by 2.0%to hit €50m. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.

See our latest analysis for Ilkka-Yhtymä Oyj

Following the latest results, Ilkka-Yhtymä Oyj's single analyst are now forecasting revenues of €54.9m in 2022. This would be a notable 9.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to crater 26% to €0.19 in the same period. In the lead-up to this report, the analyst had been modelling revenues of €49.1m and earnings per share (EPS) of €0.19 in 2022. It seems sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

As a result, it might come as a surprise that the consensus price target has been cut 5.7% to €5.00, which could suggest that these earnings are considered less valuable by the market than previously.

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. It's clear from the latest estimates that Ilkka-Yhtymä Oyj's rate of growth is expected to accelerate meaningfully, with the forecast 9.4% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 5.3% 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 6.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Ilkka-Yhtymä Oyj is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analyst holding their earnings forecasts steady, in line with previous estimates. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Ilkka-Yhtymä Oyj's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Ilkka-Yhtymä Oyj going out as far as 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 Ilkka-Yhtymä Oyj (at least 1 which is significant) , and understanding them should be part of your investment process.

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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.