Atlas Copco AB (STO:ATCO A) Just Released Its First-Quarter Earnings: Here's What Analysts Think

Investors in Atlas Copco AB (STO:ATCO A) had a good week, as its shares rose 3.6% to close at kr189 following the release of its quarterly results. The result was positive overall - although revenues of kr43b were in line with what the analysts predicted, Atlas Copco surprised by delivering a statutory profit of kr1.47 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Atlas Copco

Taking into account the latest results, the most recent consensus for Atlas Copco from 19 analysts is for revenues of kr180.0b in 2024. If met, it would imply an okay 2.4% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 5.3% to kr6.20. In the lead-up to this report, the analysts had been modelling revenues of kr175.5b and earnings per share (EPS) of kr5.97 in 2024. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of kr181, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. There are some variant perceptions on Atlas Copco, with the most bullish analyst valuing it at kr220 and the most bearish at kr122 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. We would highlight that Atlas Copco's revenue growth is expected to slow, with the forecast 3.3% annualised growth rate until the end of 2024 being well below the historical 13% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Atlas Copco.

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 Atlas Copco following these results. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at kr181, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Atlas Copco. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Atlas Copco analysts - going out to 2026, 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.