What Does The Future Hold For Arcadis NV (AMS:ARCAD)? These Analysts Have Been Cutting Their Estimates

The analysts covering Arcadis NV (AMS:ARCAD) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from two analysts covering Arcadis is for revenues of €3.8b in 2023, implying a perceptible 5.1% decline in sales compared to the last 12 months. Per-share earnings are expected to leap 61% to €2.43. Previously, the analysts had been modelling revenues of €4.5b and earnings per share (EPS) of €2.53 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.

See our latest analysis for Arcadis

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 5.1% by the end of 2023. This indicates a significant reduction from annual growth of 2.8% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.7% per year. It's pretty clear that Arcadis' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Arcadis going forwards.

Unfortunately, the earnings downgrade - if accurate - may also place pressure on Arcadis' mountain of debt, which could lead to some belt tightening for shareholders. See why we're concerned about Arcadis' balance sheet by visiting our risks dashboard for free on our platform here.

You can also see our analysis of Arcadis' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.