Need To Know: The Consensus Just Cut Its Grupa LOTOS S.A. (WSE:LTS) Estimates For 2022

Today is shaping up negative for Grupa LOTOS S.A. (WSE:LTS) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. The stock price has risen 4.8% to zł61.70 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the current consensus from Grupa LOTOS' six analysts is for revenues of zł46b in 2022 which - if met - would reflect a major 39% increase on its sales over the past 12 months. Statutory earnings per share are supposed to decline 18% to zł14.19 in the same period. Previously, the analysts had been modelling revenues of zł52b and earnings per share (EPS) of zł15.70 in 2022. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.

Check out our latest analysis for Grupa LOTOS

Analysts made no major changes to their price target of zł70.64, suggesting the downgrades are not expected to have a long-term impact on Grupa LOTOS' valuation. 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. The most optimistic Grupa LOTOS analyst has a price target of zł87.00 per share, while the most pessimistic values it at zł40.80. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Grupa LOTOS' past performance and to peers in the same industry. It's clear from the latest estimates that Grupa LOTOS' rate of growth is expected to accelerate meaningfully, with the forecast 39% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 2.3% p.a. 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 4.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Grupa LOTOS to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Grupa LOTOS after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Grupa LOTOS going out to 2024, 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 downgrading 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. 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.