Earnings Miss: OKEA ASA Missed EPS By 43% And Analysts Are Revising Their Forecasts

It's been a good week for OKEA ASA (OB:OKEA) shareholders, because the company has just released its latest second-quarter results, and the shares gained 7.2% to kr24.38. Statutory earnings per share fell badly short of expectations, coming in at kr0.84, some 43% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at kr2.6b. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for OKEA

Following the latest results, OKEA's five analysts are now forecasting revenues of kr11.4b in 2024. This would be a solid 14% improvement in revenue compared to the last 12 months. OKEA is also expected to turn profitable, with statutory earnings of kr4.87 per share. In the lead-up to this report, the analysts had been modelling revenues of kr10.6b and earnings per share (EPS) of kr5.61 in 2024. While next year's revenue estimates increased, there was also a substantial drop in EPS expectations, suggesting the consensus has a bit of a mixed view of these results.

The consensus price target was unchanged at kr35.00, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue 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. Currently, the most bullish analyst values OKEA at kr55.00 per share, while the most bearish prices it at kr23.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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 OKEA's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 29% growth on an annualised basis. This is compared to a historical growth rate of 37% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 5.0% annually. So it's clear that despite the slowdown in growth, OKEA is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better 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 estimates - from multiple OKEA analysts - going out to 2026, and you can see them free on our platform here.

We also provide an overview of the OKEA Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com