Groupe Gorgé SA (EPA:GOE) Analysts Just Slashed Next Year's Estimates

The analysts covering Groupe Gorgé SA (EPA:GOE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the three analysts covering Groupe Gorgé provided consensus estimates of €257m revenue in 2022, which would reflect a noticeable 5.7% decline on its sales over the past 12 months. Per-share earnings are expected to shoot up 175% to €0.62. Before this latest update, the analysts had been forecasting revenues of €319m and earnings per share (EPS) of €0.80 in 2022. Indeed, we can see that the analysts are a lot more bearish about Groupe Gorgé's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Groupe Gorgé

Analysts made no major changes to their price target of €19.90, suggesting the downgrades are not expected to have a long-term impact on Groupe Gorgé's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Groupe Gorgé at €21.50 per share, while the most bearish prices it at €18.60. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Groupe Gorgé is an easy business to forecast or the underlying assumptions are obvious.

Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 3.0% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 4.6% decline in revenue until the end of 2022. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.4% per year. So while a broad number of companies are forecast to grow, unfortunately Groupe Gorgé is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Groupe Gorgé's revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Groupe Gorgé after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Groupe Gorgé analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.