Selvita S.A. (WSE:SLV) Analysts Just Cut Their EPS Forecasts Substantially

The latest analyst coverage could presage a bad day for Selvita S.A. (WSE:SLV), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the consensus from three analysts covering Selvita is for revenues of zł370m in 2023, implying a definite 13% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to crater 37% to zł0.99 in the same period. Previously, the analysts had been modelling revenues of zł416m and earnings per share (EPS) of zł1.67 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Selvita

Analysts made no major changes to their price target of zł83.50, suggesting the downgrades are not expected to have a long-term impact on Selvita's valuation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 24% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 49% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. It's pretty clear that Selvita's revenues are expected to perform substantially worse 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. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Selvita's revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Selvita.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Selvita analysts - 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 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.