Earnings Miss: Saipem SpA Missed EPS By 18% And Analysts Are Revising Their Forecasts

Last week, you might have seen that Saipem SpA (BIT:SPM) released its half-year result to the market. The early response was not positive, with shares down 7.5% to €2.06 in the past week. Statutory earnings per share of €0.031 unfortunately missed expectations by 18%, although it was encouraging to see revenues of €6.4b exceed expectations by 4.4%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Saipem after the latest results.

See our latest analysis for Saipem

After the latest results, the 18 analysts covering Saipem are now predicting revenues of €13.2b in 2024. If met, this would reflect a reasonable 2.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 43% to €0.16. Before this earnings report, the analysts had been forecasting revenues of €13.1b and earnings per share (EPS) of €0.17 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at €2.88, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. There are some variant perceptions on Saipem, with the most bullish analyst valuing it at €3.40 and the most bearish at €2.10 per share. This shows there is still 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Saipem's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.5% growth on an annualised basis. This is compared to a historical growth rate of 8.8% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.4% annually. So it's pretty clear that, while Saipem's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at €2.88, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Saipem going out to 2026, and you can see them free on our platform here.

Even so, be aware that Saipem is showing 1 warning sign in our investment analysis , 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com