Detection Technology Oyj Just Missed Earnings - But Analysts Have Updated Their Models

Detection Technology Oyj (HEL:DETEC) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues were in line with forecasts, at €24m, although statutory earnings per share came in 11% below what the analysts expected, at €0.16 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Detection Technology Oyj

Taking into account the latest results, the current consensus from Detection Technology Oyj's three analysts is for revenues of €92.9m in 2021, which would reflect a notable 13% increase on its sales over the past 12 months. Per-share earnings are expected to surge 26% to €0.67. In the lead-up to this report, the analysts had been modelling revenues of €93.1m and earnings per share (EPS) of €0.71 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 7.8% to €33.83, suggesting the revised estimates are not indicative of a weaker long-term future for the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Detection Technology Oyj analyst has a price target of €35.00 per share, while the most pessimistic values it at €32.50. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Detection Technology Oyj is an easy business to forecast or the the analysts are all using similar 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. The analysts are definitely expecting Detection Technology Oyj's growth to accelerate, with the forecast 27% annualised growth to the end of 2021 ranking favourably alongside historical growth of 4.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.2% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Detection Technology Oyj to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Detection Technology Oyj. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Detection Technology Oyj. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Detection Technology Oyj analysts - going out to 2023, and you can see them free on our platform here.

You can also see our analysis of Detection Technology Oyj's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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This article by Simply Wall St is general in nature. 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.
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