Analysts Have Made A Financial Statement On Atlas Copco AB (publ)'s (STO:ATCO A) Second-Quarter Report

The analysts might have been a bit too bullish on Atlas Copco AB (publ) (STO:ATCO A), given that the company fell short of expectations when it released its quarterly results last week. Results look to have been somewhat negative - revenue fell 2.9% short of analyst estimates at kr41b, and statutory earnings of kr1.34 per share missed forecasts by 3.7%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Following last week's earnings report, Atlas Copco's 17 analysts are forecasting 2025 revenues to be kr169.9b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 3.7% to kr5.56 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr171.4b and earnings per share (EPS) of kr5.65 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

View our latest analysis for Atlas Copco

It will come as no surprise then, to learn that the consensus price target is largely unchanged at kr172. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Atlas Copco at kr210 per share, while the most bearish prices it at kr125. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.6% by the end of 2025. This indicates a significant reduction from annual growth of 14% 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 4.6% per year. It's pretty clear that Atlas Copco's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Atlas Copco's revenue is expected to perform worse than the wider industry. The consensus price target held steady at kr172, with the latest estimates not enough to have an impact on their price targets.

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. At Simply Wall St, we have a full range of analyst estimates for Atlas Copco going out to 2027, and you can see them free on our platform here..

It might also be worth considering whether Atlas Copco's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, 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.