This Analyst Just Made A Significant Upgrade To Their GROUPE SFPI SA (EPA:SFPI) Earnings Forecasts

GROUPE SFPI SA (EPA:SFPI) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's statutory forecasts. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

After this upgrade, GROUPE SFPI's lone analyst is now forecasting revenues of €723m in 2023. This would be a meaningful 15% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 22% to €0.29. Before this latest update, the analyst had been forecasting revenues of €641m and earnings per share (EPS) of €0.26 in 2023. There has definitely been an improvement in perception recently, with the analyst substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for GROUPE SFPI

Despite these upgrades, the analyst has not made any major changes to their price target of €3.75, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 GROUPE SFPI at €4.20 per share, while the most bearish prices it at €3.30. Even so, with a relatively close grouping of estimates, it looks like the analyst is quite confident in their valuations, suggesting GROUPE SFPI is an easy business to forecast or the underlying assumptions are obvious.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that GROUPE SFPI's rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 2.5% 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 19% per year. So it's clear that despite the acceleration in growth, GROUPE SFPI is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away from this upgrade is that the analyst upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at GROUPE SFPI.

Better yet, our automated discounted cash flow calculation (DCF) suggests GROUPE SFPI could be moderately undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

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.