Shareholders might have noticed that Digia Oyj (HEL:DIGIA) filed its full-year result this time last week. The early response was not positive, with shares down 3.9% to €7.96 in the past week. It looks like the results were a bit of a negative overall. While revenues of €139m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 5.6% to hit €0.39 per share. 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.
Following the latest results, Digia Oyj's three analysts are now forecasting revenues of €151.6m in 2021. This would be a notable 8.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 7.5% to €0.43. Yet prior to the latest earnings, the analysts had been anticipated revenues of €149.0m and earnings per share (EPS) of €0.40 in 2021. So the consensus seems to have become somewhat more optimistic on Digia Oyj's earnings potential following these results.
The consensus price target rose 19% to €7.50, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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 Digia Oyj at €7.20 per share, while the most bearish prices it at €6.50. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Digia Oyj's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Digia Oyj'shistorical trends, as next year's 8.8% revenue growth is roughly in line with 10% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 3.2% next year. So although Digia Oyj is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Digia Oyj following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 forecasts for Digia Oyj going out to 2025, and you can see them free on our platform here.
You can also view our analysis of Digia Oyj's balance sheet, and whether we think Digia Oyj is carrying too much debt, for free on our platform here.
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