Earnings Update: Rexel S.A. (EPA:RXL) Just Reported Its Half-Yearly Results And Analysts Are Updating Their Forecasts

There's been a notable change in appetite for Rexel S.A. (EPA:RXL) shares in the week since its half-year report, with the stock down 10% to €22.24. Revenues of €9.6b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at €1.17, missing estimates by 4.1%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Rexel after the latest results.

Check out our latest analysis for Rexel

Taking into account the latest results, the most recent consensus for Rexel from ten analysts is for revenues of €19.7b in 2024. If met, it would imply a reasonable 3.5% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 2.3% to €2.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of €19.7b and earnings per share (EPS) of €2.49 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 €27.64, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Rexel analyst has a price target of €35.00 per share, while the most pessimistic values it at €19.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Rexel shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Rexel's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.2% growth on an annualised basis. This is compared to a historical growth rate of 9.9% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.8% per year. Even after the forecast slowdown in growth, it seems obvious that Rexel is also expected to grow faster than the wider industry.

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. 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 €27.64, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Rexel analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Rexel that you should be aware of.

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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