Shareholders might have noticed that Sats ASA (OB:SATS) filed its annual result this time last week. The early response was not positive, with shares down 4.5% to kr22.20 in the past week. The statutory results were not great - while revenues of kr3.5b were in line with expectations,Sats lost kr1.90 a share in the process. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sats after the latest results.
Following the latest results, Sats' three analysts are now forecasting revenues of kr3.85b in 2021. This would be a solid 8.9% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching kr0.12 per share. In the lead-up to this report, the analysts had been modelling revenues of kr4.08b and earnings per share (EPS) of kr0.64 in 2021. There looks to have been a significant drop in sentiment regarding Sats' prospects after these latest results, with a small dip in revenues and the analysts now forecasting a loss instead of a profit.
There was no major change to the consensus price target of kr22.88, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 Sats, with the most bullish analyst valuing it at kr26.00 and the most bearish at kr21.00 per share. This is a very narrow spread of estimates, implying either that Sats is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. The analysts are definitely expecting Sats' growth to accelerate, with the forecast 8.9% growth ranking favourably alongside historical growth of 5.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. So it's clear that despite the acceleration in growth, Sats is expected to grow meaningfully slower than the industry average.
The Bottom Line
The biggest low-light for us was that the forecasts for Sats dropped from profits to a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at kr22.88, with the latest estimates not enough to have an impact on their price targets.
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 Sats going out to 2023, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Sats that you should be aware of.
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