Esker SA Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Investors in Esker SA (EPA:ALESK) had a good week, as its shares rose 6.4% to close at €195 following the release of its annual results. The result was positive overall - although revenues of €112m were in line with what the analysts predicted, Esker surprised by delivering a statutory profit of €2.00 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Esker after the latest results.

Check out our latest analysis for Esker

Taking into account the latest results, the most recent consensus for Esker from three analysts is for revenues of €128.9m in 2021 which, if met, would be a meaningful 15% increase on its sales over the past 12 months. Per-share earnings are expected to surge 37% to €2.40. In the lead-up to this report, the analysts had been modelling revenues of €127.5m and earnings per share (EPS) of €2.25 in 2021. So the consensus seems to have become somewhat more optimistic on Esker's earnings potential following these results.

The consensus price target was unchanged at €234, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. There are some variant perceptions on Esker, with the most bullish analyst valuing it at €265 and the most bearish at €208 per share. This is a very narrow spread of estimates, implying either that Esker is an easy company to value, or - more likely - the analysts are relying heavily on some key 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. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 15% growth on an annualised basis. That is in line with its 13% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.1% per year. So it's pretty clear that Esker is forecast to grow substantially faster than its industry.

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 Esker following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at €234, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Esker going out to 2025, and you can see them free on our platform here.

We also provide an overview of the Esker Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. 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.
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