Analyst Estimates: Here's What Brokers Think Of Arion banki hf. (ICE:ARION) After Its Third-Quarter Report

It's been a good week for Arion banki hf. (ICE:ARION) shareholders, because the company has just released its latest third-quarter results, and the shares gained 5.6% to Kr160. Results look mixed - while revenue fell marginally short of analyst estimates at Kr14b, statutory earnings were in line with expectations, at Kr16.93 per share. 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.

Check out our latest analysis for Arion banki hf

Taking into account the latest results, the most recent consensus for Arion banki hf from three analysts is for revenues of Kr68.5b in 2023 which, if met, would be a notable 20% increase on its sales over the past 12 months. Per-share earnings are expected to jump 46% to Kr19.31. In the lead-up to this report, the analysts had been modelling revenues of Kr68.5b and earnings per share (EPS) of Kr19.31 in 2023. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at Kr199. 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. Currently, the most bullish analyst values Arion banki hf at Kr210 per share, while the most bearish prices it at Kr178. This is a very narrow spread of estimates, implying either that Arion banki hf is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Arion banki hf's rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 7.2% 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 5.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Arion banki hf to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at Kr199, 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. At Simply Wall St, we have a full range of analyst estimates for Arion banki hf 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 2 warning signs for Arion banki hf 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.