It's been a good week for IMCD N.V. (AMS:IMCD) shareholders, because the company has just released its latest annual results, and the shares gained 4.3% to €106. Results overall were respectable, with statutory earnings of €2.25 per share roughly in line with what the analysts had forecast. Revenues of €2.8b came in 2.4% ahead of analyst predictions. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on IMCD after the latest results.
Taking into account the latest results, the most recent consensus for IMCD from eleven analysts is for revenues of €3.04b in 2021 which, if met, would be a decent 9.1% increase on its sales over the past 12 months. Per-share earnings are expected to jump 28% to €2.89. Yet prior to the latest earnings, the analysts had been anticipated revenues of €3.05b and earnings per share (EPS) of €2.78 in 2021. So the consensus seems to have become somewhat more optimistic on IMCD's earnings potential following these results.
The consensus price target was unchanged at €109, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values IMCD at €125 per share, while the most bearish prices it at €100.00. This is a very narrow spread of estimates, implying either that IMCD is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that IMCD's revenue growth will slow down substantially, with revenues next year expected to grow 9.1%, compared to a historical growth rate of 13% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.7% next year. Even after the forecast slowdown in growth, it seems obvious that IMCD is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards IMCD following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to 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.
With that in mind, we wouldn't be too quick to come to a conclusion on IMCD. Long-term earnings power is much more important than next year's profits. We have forecasts for IMCD going out to 2025, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for IMCD that you need to be mindful of.
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