Earnings Beat: Veidekke ASA Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Investors in Veidekke ASA (OB:VEI) had a good week, as its shares rose 2.4% to close at kr121 following the release of its second-quarter results. Revenues kr11b disappointed slightly, at3.9% below what the analyst had predicted. Profits were a relative bright spot, with statutory per-share earnings of kr2.70 coming in 14% above what was anticipated. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

View our latest analysis for Veidekke

Following last week's earnings report, Veidekke's lone analyst are forecasting 2024 revenues to be kr42.5b, approximately in line with the last 12 months. Statutory per share are forecast to be kr9.56, approximately in line with the last 12 months. In the lead-up to this report, the analyst had been modelling revenues of kr43.6b and earnings per share (EPS) of kr9.31 in 2024. If anything, the analyst looks to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

There's been a 8.0% lift in the price target to kr135, with the analyst signalling that the higher earnings forecasts are more relevant to the business than the weaker revenue estimates.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 1.5% by the end of 2024. This indicates a significant reduction from annual growth of 3.6% 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 21% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Veidekke is expected to lag 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 Veidekke's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. With that said, earnings are more important to the long-term value of the business. There was also a nice increase in the price target, with the analyst 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 least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Veidekke you should know about.

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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.