€56.90 - That's What Analysts Think Wavestone SA (EPA:WAVE) Is Worth After These Results

It's been a good week for Wavestone SA (EPA:WAVE) shareholders, because the company has just released its latest second-quarter results, and the shares gained 6.3% to €54.20. It was a credible result overall, with revenues of €103m and statutory earnings per share of €1.27 both in line with analyst estimates, showing that Wavestone is executing in line with expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Wavestone

Following the latest results, Wavestone's three analysts are now forecasting revenues of €466.7m in 2022. This would be a modest 4.0% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to step up 17% to €2.29. In the lead-up to this report, the analysts had been modelling revenues of €466.3m and earnings per share (EPS) of €2.01 in 2022. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice gain to earnings per share expectations following these results.

The consensus price target rose 14% to €56.90, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Wavestone analyst has a price target of €60.00 per share, while the most pessimistic values it at €51.70. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Wavestone is an easy business to forecast or the the analysts are all using similar assumptions.

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. It's clear from the latest estimates that Wavestone's rate of growth is expected to accelerate meaningfully, with the forecast 8.2% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 6.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.3% annually. Wavestone is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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 Wavestone following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 estimates - from multiple Wavestone analysts - going out to 2024, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Wavestone 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.