Earnings Beat: Digital Bros S.p.A. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

As you might know, Digital Bros S.p.A. (BIT:DIB) recently reported its yearly numbers. Revenues disappointed slightly, as sales of €132m were 3.2% below what the analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of €1.97 coming in 11% above what was anticipated. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Digital Bros after the latest results.

View our latest analysis for Digital Bros

Taking into account the latest results, the most recent consensus for Digital Bros from three analysts is for revenues of €151.5m in 2023 which, if met, would be a meaningful 15% increase on its sales over the past 12 months. Statutory earnings per share are forecast to drop 10% to €1.79 in the same period. In the lead-up to this report, the analysts had been modelling revenues of €159.1m and earnings per share (EPS) of €1.92 in 2023. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The analysts made no major changes to their price target of €35.70, suggesting the downgrades are not expected to have a long-term impact on Digital Bros' valuation. 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. The most optimistic Digital Bros analyst has a price target of €40.10 per share, while the most pessimistic values it at €30.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Digital Bros is an easy business to forecast or the the analysts are all using similar assumptions.

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 clear from the latest estimates that Digital Bros' 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 10% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Digital Bros to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Digital Bros. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. 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.

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. We have estimates - from multiple Digital Bros analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Digital Bros that we have uncovered.

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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.