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

The analysts might have been a bit too bullish on Legrand SA (EPA:LR), given that the company fell short of expectations when it released its first-quarter results last week. Legrand missed analyst forecasts, with revenues of €2.0b and statutory earnings per share (EPS) of €1.05, falling short by 2.3% and 9.4% respectively. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Legrand

Taking into account the latest results, the most recent consensus for Legrand from 18 analysts is for revenues of €8.49b in 2024. If met, it would imply a reasonable 2.3% increase on its revenue over the past 12 months. Statutory per-share earnings are expected to be €4.22, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of €8.49b and earnings per share (EPS) of €4.36 in 2024. 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.

It might be a surprise to learn that the consensus price target was broadly unchanged at €95.83, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Legrand analyst has a price target of €113 per share, while the most pessimistic values it at €75.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Legrand's revenue growth is expected to slow, with the forecast 3.1% annualised growth rate until the end of 2024 being well below the historical 7.8% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that Legrand is also expected to grow slower than other industry participants.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at €95.83, 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 Legrand. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Legrand analysts - going out to 2026, and you can see them free on our platform here.

You can also view our analysis of Legrand's balance sheet, and whether we think Legrand is carrying too much debt, for free on our platform here.

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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.