Need To Know: The Consensus Just Cut Its Nacon S.A. (EPA:NACON) Estimates For 2023

The latest analyst coverage could presage a bad day for Nacon S.A. (EPA:NACON), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the current consensus from Nacon's four analysts is for revenues of €169m in 2023 which - if met - would reflect a meaningful 8.5% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 32% to €0.15. Before this latest update, the analysts had been forecasting revenues of €209m and earnings per share (EPS) of €0.16 in 2023. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a minor downgrade to earnings per share numbers as well.

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The consensus price target fell 16% to €4.78, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 Nacon, with the most bullish analyst valuing it at €7.00 and the most bearish at €4.30 per share. 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 Nacon shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Nacon's past performance and to peers in the same industry. The analysts are definitely expecting Nacon's growth to accelerate, with the forecast 18% annualised growth to the end of 2023 ranking favourably alongside historical growth of 11% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Nacon to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Nacon. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Nacon's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Nacon after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Nacon going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.