Signify N.V. Just Beat EPS By 114%: Here's What Analysts Think Will Happen Next

Investors in Signify N.V. (AMS:LIGHT) had a good week, as its shares rose 7.1% to close at €19.64 following the release of its first-quarter results. Revenues were €1.4b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at €0.53, an impressive 114% ahead of estimates. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Following last week's earnings report, Signify's twelve analysts are forecasting 2025 revenues to be €6.16b, approximately in line with the last 12 months. Statutory earnings per share are forecast to shrink 8.2% to €2.57 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €6.21b and earnings per share (EPS) of €2.47 in 2025. So the consensus seems to have become somewhat more optimistic on Signify's earnings potential following these results.

Check out our latest analysis for Signify

There's been no major changes to the consensus price target of €26.31, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. The most optimistic Signify analyst has a price target of €42.00 per share, while the most pessimistic values it at €15.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2025. That would be a definite improvement, given that the past five years have seen revenue shrink 0.2% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.6% per year. Although Signify's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Signify's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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 Signify. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Signify going out to 2027, and you can see them free on our platform here..

Even so, be aware that Signify is showing 1 warning sign in our investment analysis , you should know about...

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

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.