Wendel Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for Wendel (EPA:MF) shareholders, because the company has just released its latest yearly results, and the shares gained 5.0% to €92.70. The results were mixed; although revenues of €7.5b fell 11% short of what the analysts had predicted, per-share (statutory) earnings of €23.78 beat expectations by 811%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Wendel

Taking into account the latest results, the current consensus from Wendel's three analysts is for revenues of €8.64b in 2022, which would reflect a notable 15% increase on its sales over the past 12 months. Per-share earnings are expected to surge 42% to €2.73. Yet prior to the latest earnings, the analysts had been anticipated revenues of €8.64b and earnings per share (EPS) of €2.73 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of €138, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Wendel at €155 per share, while the most bearish prices it at €129. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Wendel's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 15% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 0.7% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to decline 74% per year. So it's pretty clear that Wendel is expected to grow faster 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, they also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations. Their estimates also suggest that Wendel's revenues are expected to perform better than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Wendel. Long-term earnings power is much more important than next year's profits. We have forecasts for Wendel going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Wendel that you need to be mindful 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.