Euroapi S.A. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts

There's been a major selloff in Euroapi S.A. (EPA:EAPI) shares in the week since it released its yearly report, with the stock down 41% to €4.00. Revenues came in at €1.0b, in line with estimates, while Euroapi reported a statutory loss of €2.02 per share, well short of prior analyst forecasts for a profit. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Euroapi after the latest results.

See our latest analysis for Euroapi

Following last week's earnings report, Euroapi's five analysts are forecasting 2024 revenues to be €1.02b, approximately in line with the last 12 months. Euroapi is also expected to turn profitable, with statutory earnings of €0.19 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.04b and earnings per share (EPS) of €0.18 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target fell 14% to €7.20, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Euroapi at €10.50 per share, while the most bearish prices it at €4.50. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Euroapi's past performance and to peers in the same industry. We would highlight that Euroapi's revenue growth is expected to slow, with the forecast 0.03% annualised growth rate until the end of 2024 being well below the historical 3.7% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Euroapi.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Euroapi following these results. 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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Euroapi's future valuation.

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 Euroapi going out to 2026, and you can see them free on our platform here.

Even so, be aware that Euroapi is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

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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.