Things Look Grim For Eolus Aktiebolag (publ) (STO:EOLU B) After Today's Downgrade

Market forces rained on the parade of Eolus Aktiebolag (publ) (STO:EOLU B) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

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After the downgrade, the consensus from Eolus Aktiebolag's two analysts is for revenues of kr3.1b in 2025, which would reflect a discernible 2.5% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to plummet 50% to kr5.78 in the same period. Before this latest update, the analysts had been forecasting revenues of kr3.9b and earnings per share (EPS) of kr14.22 in 2025. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Eolus Aktiebolag

The consensus price target fell 17% to kr85.00, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. One more thing stood out to us about these estimates, and it's the idea that Eolus Aktiebolag's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 4.9% to the end of 2025. This tops off a historical decline of 2.4% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 4.4% annually. So while a broad number of companies are forecast to grow, unfortunately Eolus Aktiebolag is expected to see its sales affected worse than other companies in the 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Eolus Aktiebolag.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Eolus Aktiebolag's financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 2 other risks we've identified.

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 with high insider ownership.

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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.