News Flash: 7 Analysts Think Maisons du Monde S.A. (EPA:MDM) Earnings Are Under Threat

The analysts covering Maisons du Monde S.A. (EPA:MDM) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the seven analysts covering Maisons du Monde, is for revenues of €1.3b in 2022, which would reflect a noticeable 7.3% reduction in Maisons du Monde's sales over the past 12 months. Statutory earnings per share are anticipated to sink 15% to €1.25 in the same period. Prior to this update, the analysts had been forecasting revenues of €1.4b and earnings per share (EPS) of €1.51 in 2022. Indeed, we can see that the analysts are a lot more bearish about Maisons du Monde's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Maisons du Monde

Analysts made no major changes to their price target of €22.65, suggesting the downgrades are not expected to have a long-term impact on Maisons du Monde's valuation. 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. The most optimistic Maisons du Monde analyst has a price target of €27.50 per share, while the most pessimistic values it at €13.50. This is a fairly broad spread of estimates, suggesting that the 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. We would highlight that sales are expected to reverse, with a forecast 9.6% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 7.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Maisons du Monde is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Maisons du Monde. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Maisons du Monde's revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Maisons du Monde after the downgrade.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Maisons du Monde analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.