Earnings Beat: CD Projekt S.A. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

A week ago, CD Projekt S.A. (WSE:CDR) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. The company beat forecasts, with revenue of zł198m, some 7.8% above estimates, and statutory earnings per share (EPS) coming in at zł0.70, 79% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for CD Projekt

Taking into account the latest results, the current consensus, from the 13 analysts covering CD Projekt, is for revenues of zł832.8m in 2024. This implies a substantial 37% reduction in CD Projekt's revenue over the past 12 months. Statutory earnings per share are expected to dive 46% to zł3.03 in the same period. Before this earnings report, the analysts had been forecasting revenues of zł828.3m and earnings per share (EPS) of zł2.80 in 2024. So the consensus seems to have become somewhat more optimistic on CD Projekt's earnings potential following these results.

The consensus price target was unchanged at zł129, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 CD Projekt analyst has a price target of zł207 per share, while the most pessimistic values it at zł85.00. 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 CD Projekt's past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 61% annualised decline to the end of 2024. That is a notable change from historical growth of 7.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CD Projekt is expected to lag the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around CD Projekt's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that CD Projekt's revenue is expected to perform worse 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 CD Projekt going out to 2026, and you can see them free on our platform here.

We also provide an overview of the CD Projekt 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.