Analysts might have been a bit too bullish on Prysmian S.p.A. (BIT:PRY), given that the company fell short of expectations when it released its quarterly results last week. Results showed a clear earnings miss, with €2.8b revenue coming in 4.5% lower than what analysts expected. Earnings per share (EPS) of €0.31 missed the mark badly, arriving some 37% below what analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings consensus estimates to see what could be in store for next year.
Following the latest results, Prysmian's 13 analysts are now forecasting revenues of €11.9b in 2020. This would be a satisfactory 3.3% improvement in sales compared to the last 12 months. Earnings per share are expected to bounce 98% to €1.69. In the lead-up to this report, analysts had been modelling revenues of €12.1b and earnings per share (EPS) of €1.71 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of €22.92, suggesting that the company has met expectations in its recent result. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Prysmian at €26.70 per share, while the most bearish prices it at €18.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's pretty clear that analysts expect Prysmian's revenue growth will slow down substantially, with revenues next year expected to grow 3.3%, compared to a historical growth rate of 10% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 4.7% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Prysmian to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Prysmian's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Prysmian going out to 2022, and you can see them free on our platform here..
You can also view our analysis of Prysmian's balance sheet, and whether we think Prysmian is carrying too much debt, for free on our platform here.
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Prysmian S.p.A., together with its subsidiaries, produces, distributes, and sells cables and systems, and related accessories for the energy and telecommunications industries worldwide.
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Excellent balance sheet with proven track record.