Arkema S.A. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Arkema S.A. (EPA:AKE) shareholders are probably feeling a little disappointed, since its shares fell 6.5% to €94.22 in the week after its latest full-year results. Statutory earnings per share fell badly short of expectations, coming in at €5.36, some 24% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at €9.5b. 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 Arkema after the latest results.

View our latest analysis for Arkema

Following last week's earnings report, Arkema's 13 analysts are forecasting 2024 revenues to be €9.65b, approximately in line with the last 12 months. Per-share earnings are expected to bounce 30% to €7.30. Yet prior to the latest earnings, the analysts had been anticipated revenues of €9.84b and earnings per share (EPS) of €8.68 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at €112, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Arkema analyst has a price target of €134 per share, while the most pessimistic values it at €90.00. 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.

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. We would highlight that Arkema's revenue growth is expected to slow, with the forecast 1.4% annualised growth rate until the end of 2024 being well below the historical 5.4% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Arkema is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Arkema. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at €112, 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 forecasts for Arkema going out to 2026, 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 Arkema that we have uncovered.

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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.