Renault SA Just Missed Earnings - But Analysts Have Updated Their Models

Last week, you might have seen that Renault SA (EPA:RNO) released its half-yearly result to the market. The early response was not positive, with shares down 9.4% to €43.81 in the past week. It was not a great result overall. While revenues of €27b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 14% to hit €4.67 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Renault

Taking into account the latest results, the current consensus from Renault's 17 analysts is for revenues of €54.5b in 2024. This would reflect a credible 3.9% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 111% to €10.89. Yet prior to the latest earnings, the analysts had been anticipated revenues of €54.6b and earnings per share (EPS) of €11.90 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at €58.92, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. There are some variant perceptions on Renault, with the most bullish analyst valuing it at €73.90 and the most bearish at €48.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Renault's past performance and to peers in the same industry. For example, we noticed that Renault's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 7.9% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 0.2% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 2.6% annually. So it looks like Renault is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Renault. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at €58.92, with the latest estimates not enough to have an impact on their price targets.

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

And what about risks? Every company has them, and we've spotted 4 warning signs for Renault (of which 1 is concerning!) you should know about.

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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.

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