Results: Arkema S.A. Exceeded Expectations And The Consensus Has Updated Its Estimates

As you might know, Arkema S.A. (EPA:AKE) recently reported its half-year numbers. It looks like a credible result overall - although revenues of €4.9b were in line with what the analysts predicted, Arkema surprised by delivering a statutory profit of €1.93 per share, a notable 15% above expectations. 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 Arkema after the latest results.

See our latest analysis for Arkema

After the latest results, the 17 analysts covering Arkema are now predicting revenues of €9.71b in 2024. If met, this would reflect a modest 3.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 49% to €6.83. In the lead-up to this report, the analysts had been modelling revenues of €9.70b and earnings per share (EPS) of €7.20 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at €111, 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. Currently, the most bullish analyst values Arkema at €127 per share, while the most bearish prices it at €92.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Arkema's growth to accelerate, with the forecast 6.1% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.3% annually. Arkema is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Arkema going out to 2026, and you can see them free on our platform here.

You can also see whether Arkema is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com