Leonardo S.p.a. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

A week ago, Leonardo S.p.a. (BIT:LDO) came out with a strong set of half-yearly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 2.4% to hit €6.3b. Leonardo also reported a statutory profit of €0.31, which was an impressive 104% above what the analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Leonardo

Taking into account the latest results, Leonardo's 15 analysts currently expect revenues in 2021 to be €14.1b, approximately in line with the last 12 months. Per-share earnings are expected to soar 54% to €0.96. Yet prior to the latest earnings, the analysts had been anticipated revenues of €14.0b and earnings per share (EPS) of €0.90 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at €9.29, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Leonardo, with the most bullish analyst valuing it at €12.15 and the most bearish at €7.10 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Leonardo shareholders.

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. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 3.0% growth on an annualised basis. That is in line with its 3.5% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 8.8% annually. So it's pretty clear that Leonardo is expected to grow slower than similar companies in the same industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Leonardo's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at €9.29, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Leonardo going out to 2023, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Leonardo that you should be aware of.

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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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