Forecast: Analysts Think Erbud S.A.'s (WSE:ERB) Business Prospects Have Improved Drastically

Erbud S.A. (WSE:ERB) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Erbud has also found favour with investors, with the stock up a worthy 29% to zł58.00 over the past week. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the most recent consensus for Erbud from its three analysts is for revenues of zł2.3b in 2021 which, if met, would be an okay 3.7% increase on its sales over the past 12 months. Statutory earnings per share are supposed to nosedive 22% to zł2.84 in the same period. Previously, the analysts had been modelling revenues of zł2.1b and earnings per share (EPS) of zł2.02 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Erbud

With these upgrades, we're not surprised to see that the analysts have lifted their price target 84% to zł60.30 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Erbud, with the most bullish analyst valuing it at zł70.60 and the most bearish at zł50.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Erbud shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Erbud's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 3.7% growth on an annualised basis. This is compared to a historical growth rate of 7.5% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 1.3% annually. Factoring in the forecast slowdown in growth, it's pretty clear that Erbud is still expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Erbud.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Erbud going out to 2025, and you can see them free on our platform here..

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. 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.
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