Kongsberg Gruppen ASA Just Beat EPS By 61%: Here's What Analysts Think Will Happen Next

Investors in Kongsberg Gruppen ASA (OB:KOG) had a good week, as its shares rose 7.8% to close at kr160 following the release of its third-quarter results. Revenues were kr5.8b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at kr2.41, an impressive 61% ahead of estimates. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Kongsberg Gruppen

Taking into account the latest results, Kongsberg Gruppen's five analysts currently expect revenues in 2021 to be kr27.3b, approximately in line with the last 12 months. Statutory earnings per share are predicted to leap 28% to kr9.11. Before this earnings report, the analysts had been forecasting revenues of kr27.3b and earnings per share (EPS) of kr8.86 in 2021. So the consensus seems to have become somewhat more optimistic on Kongsberg Gruppen's earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 9.2% to kr190. 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. There are some variant perceptions on Kongsberg Gruppen, with the most bullish analyst valuing it at kr215 and the most bearish at kr155 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kongsberg Gruppen's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Kongsberg Gruppen's revenue growth will slow down substantially, with revenues next year expected to grow 1.2%, compared to a historical growth rate of 10% 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 7.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Kongsberg Gruppen is also expected to grow slower than other industry participants.

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 Kongsberg Gruppen following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Kongsberg Gruppen's revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Kongsberg Gruppen going out to 2022, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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This article by Simply Wall St is general in nature. 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.
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