Earnings Beat: Orion Oyj Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Last week, you might have seen that Orion Oyj (HEL:ORNBV) released its full-year result to the market. The early response was not positive, with shares down 7.0% to €39.76 in the past week. The result was positive overall - although revenues of €1.2b were in line with what the analysts predicted, Orion Oyj surprised by delivering a statutory profit of €1.54 per share, modestly greater than expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Orion Oyj

Taking into account the latest results, the consensus forecast from Orion Oyj's five analysts is for revenues of €1.36b in 2024. This reflects a solid 14% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 4.4% to €1.61. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.31b and earnings per share (EPS) of €1.68 in 2024. So it's pretty clear consensus is mixed on Orion Oyj after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.

The analysts also cut Orion Oyj's price target 5.3% to €41.62, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in revenue. 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. The most optimistic Orion Oyj analyst has a price target of €47.00 per share, while the most pessimistic values it at €35.00. This is a very narrow spread of estimates, implying either that Orion Oyj is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 Orion Oyj's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2024 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 7.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Orion Oyj is expected to grow much faster than its 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than 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 Orion Oyj's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Orion Oyj. Long-term earnings power is much more important than next year's profits. We have forecasts for Orion Oyj going out to 2026, and you can see them free on our platform here.

Even so, be aware that Orion Oyj is showing 3 warning signs in our investment analysis , and 2 of those are a bit concerning...

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.