Arkema S.A. Just Missed EPS By 78%: Here's What Analysts Think Will Happen Next

Last week saw the newest quarterly earnings release from Arkema S.A. (EPA:AKE), an important milestone in the company's journey to build a stronger business. Statutory earnings per share fell badly short of expectations, coming in at €0.33, some 78% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at €2.4b. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, Arkema's 15 analysts currently expect revenues in 2025 to be €9.60b, approximately in line with the last 12 months. Statutory earnings per share are predicted to leap 35% to €5.51. In the lead-up to this report, the analysts had been modelling revenues of €9.80b and earnings per share (EPS) of €6.19 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

Check out our latest analysis for Arkema

The analysts made no major changes to their price target of €90.09, suggesting the downgrades are not expected to have a long-term impact on Arkema's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Arkema analyst has a price target of €118 per share, while the most pessimistic values it at €56.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Arkema's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 0.3% growth on an annualised basis. This is compared to a historical growth rate of 3.6% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.3% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Arkema.

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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at €90.09, 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 Arkema. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Arkema analysts - going out to 2027, and you can see them free on our platform here.

You can also view our analysis of Arkema's balance sheet, and whether we think Arkema is carrying too much debt, for free on our platform here.

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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.