Here's What Analysts Are Forecasting For Elopak ASA (OB:ELO) After Its Second-Quarter Results

Elopak ASA (OB:ELO) shareholders are probably feeling a little disappointed, since its shares fell 3.6% to kr38.35 in the week after its latest second-quarter results. Revenues were €288m, with Elopak reporting some 2.7% below analyst expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Elopak after the latest results.

See our latest analysis for Elopak

Taking into account the latest results, Elopak's four analysts currently expect revenues in 2024 to be €1.17b, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 2.1% to €0.27. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.18b and earnings per share (EPS) of €0.27 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr43.01, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Elopak analyst has a price target of kr44.86 per share, while the most pessimistic values it at kr39.08. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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 Elopak's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.9% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past three years. Compare this to the 34 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.2% per year. Factoring in the forecast slowdown in growth, it looks like Elopak is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Elopak. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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.

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

However, before you get too enthused, we've discovered 2 warning signs for Elopak that you should be aware of.

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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.