Earnings Release: Here's Why Analysts Cut Their Altri, SGPS, S.A. (ELI:ALTR) Price Target To €7.21

Shareholders of Altri, SGPS, S.A. (ELI:ALTR) will be pleased this week, given that the stock price is up 10% to €5.97 following its latest quarterly results. It was a credible result overall, with revenues of €249m and statutory earnings per share of €0.62 both in line with analyst estimates, showing that Altri SGPS is executing in line with expectations. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Altri SGPS

Taking into account the latest results, the consensus forecast from Altri SGPS' six analysts is for revenues of €932.3m in 2022, which would reflect a credible 7.9% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 25% to €0.81. Before this earnings report, the analysts had been forecasting revenues of €916.7m and earnings per share (EPS) of €0.74 in 2022. So the consensus seems to have become somewhat more optimistic on Altri SGPS' earnings potential following these results.

The consensus price target fell 10% to €7.21, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. 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. There are some variant perceptions on Altri SGPS, with the most bullish analyst valuing it at €8.60 and the most bearish at €5.80 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Altri SGPS' rate of growth is expected to accelerate meaningfully, with the forecast 11% 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 1.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Altri SGPS is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Altri SGPS following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Altri SGPS. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Altri SGPS analysts - going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Altri SGPS (1 is a bit concerning!) that you need to be mindful of.

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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.