Analyst Estimates: Here's What Brokers Think Of STS Holding S.A. (WSE:STH) After Its Third-Quarter Report

Investors in STS Holding S.A. (WSE:STH) had a good week, as its shares rose 2.4% to close at zł17.30 following the release of its quarterly results. The results were positive, with revenue coming in at zł150m, beating analyst expectations by 4.7%. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Our analysis indicates that STH is potentially undervalued!

Following the latest results, STS Holding's five analysts are now forecasting revenues of zł631.2m in 2023. This would be a meaningful 19% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 48% to zł1.19. Yet prior to the latest earnings, the analysts had been anticipated revenues of zł627.2m and earnings per share (EPS) of zł1.53 in 2023. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at zł22.26, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic STS Holding analyst has a price target of zł30.80 per share, while the most pessimistic values it at zł16.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the STS Holding's past performance and to peers in the same industry. It's clear from the latest estimates that STS Holding's rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 12% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.9% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that STS Holding is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for STS Holding. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster 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 forecasts for STS Holding going out to 2024, and you can see them free on our platform here.

Even so, be aware that STS Holding is showing 1 warning sign in our investment analysis , 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.