Earnings Update: Nel ASA (OB:NEL) Just Reported Its Annual Results And Analysts Are Updating Their Forecasts

It's been a good week for Nel ASA (OB:NEL) shareholders, because the company has just released its latest annual results, and the shares gained 2.5% to kr4.92. The business exceeded expectations with revenue of kr1.8b coming in 7.0% ahead of forecasts. Statutory losses were kr0.52 a share, in line with what the analysts predicted. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Nel

After the latest results, the 20 analysts covering Nel are now predicting revenues of kr2.15b in 2024. If met, this would reflect a huge 21% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 36% to kr0.33. Before this earnings announcement, the analysts had been modelling revenues of kr2.22b and losses of kr0.31 per share in 2024. So it's pretty clear consensus is more negative on Nel after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a pronounced increase to per-share loss expectations.

The average price target was broadly unchanged at kr7.44, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Nel at kr14.00 per share, while the most bearish prices it at kr3.50. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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 pretty clear that there is an expectation that Nel's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 21% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.4% per year. Even after the forecast slowdown in growth, it seems obvious that Nel is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded Nel's revenue estimates, but industry data suggests that it is 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.

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 forecasts for Nel going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Nel .

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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.