Rothschild & Co SCA Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for Rothschild & Co SCA (EPA:ROTH) shareholders, because the company has just released its latest full-year results, and the shares gained 6.1% to €31.10. Revenues were €1.8b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of €2.19 were also better than expected, beating analyst predictions by 18%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Rothschild & Co after the latest results.

See our latest analysis for Rothschild & Co

Following the latest results, Rothschild & Co's three analysts are now forecasting revenues of €1.97b in 2021. This would be a notable 9.9% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 51% to €3.38. Before this earnings report, the analysts had been forecasting revenues of €1.93b and earnings per share (EPS) of €3.06 in 2021. Although the revenue estimates have not really changed, we can see there's been a decent improvement in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of €32.43, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Rothschild & Co at €33.30 per share, while the most bearish prices it at €32.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Rothschild & Co is an easy business to forecast or the the analysts are all using similar assumptions.

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. The analysts are definitely expecting Rothschild & Co's growth to accelerate, with the forecast 9.9% annualised growth to the end of 2021 ranking favourably alongside historical growth of 2.9% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Rothschild & Co is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Rothschild & Co's earnings potential next year. 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 €32.43, 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 Rothschild & Co. Long-term earnings power is much more important than next year's profits. We have forecasts for Rothschild & Co going out to 2022, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Rothschild & Co that we have uncovered.

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