Earnings Beat: Ipsos SA Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a good week for Ipsos SA (EPA:IPS) shareholders, because the company has just released its latest yearly results, and the shares gained 5.9% to €42.30. Ipsos reported €2.1b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of €4.04 beat expectations, being 8.5% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Ipsos

Taking into account the latest results, the consensus forecast from Ipsos' five analysts is for revenues of €2.27b in 2022, which would reflect a satisfactory 5.9% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 2.4% to €4.24. Before this earnings report, the analysts had been forecasting revenues of €2.23b and earnings per share (EPS) of €4.03 in 2022. So the consensus seems to have become somewhat more optimistic on Ipsos' earnings potential following these results.

The consensus price target rose 7.2% to €52.00, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Ipsos at €56.00 per share, while the most bearish prices it at €45.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Ipsos 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. It's clear from the latest estimates that Ipsos' rate of growth is expected to accelerate meaningfully, with the forecast 5.9% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.4% p.a. 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 3.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Ipsos 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 Ipsos' 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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Ipsos going out to 2024, and you can see them free on our platform here.

Even so, be aware that Ipsos is showing 1 warning sign in our investment analysis , you should know about...

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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.