Analysts Are Updating Their Nexans S.A. (EPA:NEX) Estimates After Its Interim Results

Last week saw the newest half-yearly earnings release from Nexans S.A. (EPA:NEX), an important milestone in the company's journey to build a stronger business. Results overall were respectable, with statutory earnings of €1.76 per share roughly in line with what the analysts had forecast. Revenues of €3.1b came in 2.2% ahead of analyst predictions. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Nexans after the latest results.

View our latest analysis for Nexans

Taking into account the latest results, the current consensus, from the seven analysts covering Nexans, is for revenues of €6.06b in 2021, which would reflect an uncomfortable 10% reduction in Nexans' sales over the past 12 months. Statutory earnings per share are expected to plunge 35% to €3.21 in the same period. Before this earnings report, the analysts had been forecasting revenues of €6.03b and earnings per share (EPS) of €3.15 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of €77.55, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Nexans, with the most bullish analyst valuing it at €92.00 and the most bearish at €55.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 20% by the end of 2021. This indicates a significant reduction from annual growth of 1.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.7% per year. It's pretty clear that Nexans' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Nexans' revenues are expected to perform worse than the wider industry. The consensus price target held steady at €77.55, 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 Nexans. Long-term earnings power is much more important than next year's profits. We have forecasts for Nexans going out to 2023, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Nexans you should know about.

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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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