Stock Analysis

Believe S.A. (EPA:BLV) Just Released Its Yearly Earnings: Here's What Analysts Think

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It's been a mediocre week for Believe S.A. (EPA:BLV) shareholders, with the stock dropping 11% to €10.05 in the week since its latest full-year results. It was an okay result overall, with revenues coming in at €761m, roughly what the analysts had been expecting. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Believe

ENXTPA:BLV Earnings and Revenue Growth March 19th 2023

Taking into account the latest results, the most recent consensus for Believe from ten analysts is for revenues of €910.6m in 2023 which, if met, would be a notable 20% increase on its sales over the past 12 months. Believe is also expected to turn profitable, with statutory earnings of €0.022 per share. In the lead-up to this report, the analysts had been modelling revenues of €937.0m and earnings per share (EPS) of €0.046 in 2023. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.

The analysts made no major changes to their price target of €16.29, suggesting the downgrades are not expected to have a long-term impact on Believe's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Believe analyst has a price target of €24.00 per share, while the most pessimistic values it at €11.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the 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. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 20% growth on an annualised basis. That is in line with its 23% annual growth over the past three years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues fall 1.1% per year. So it's clear that not only is revenue growth expected to be maintained, but Believe is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Believe. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 Believe. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Believe analysts - going out to 2025, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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