It’s been a good week for NIBE Industrier AB (publ) (STO:NIBE B) shareholders, because the company has just released its latest annual results, and the shares gained 6.5% to kr179. Results were roughly in line with estimates, with revenues of kr25b and statutory earnings per share of kr4.31. Following the result, 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 analysts are expecting for next year.
Taking into account the latest results, the latest consensus from NIBE Industrier’s five analysts is for revenues of kr28.0b in 2020, which would reflect a notable 10% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to swell 17% to kr5.05. Before this earnings report, analysts had been forecasting revenues of kr27.5b and earnings per share (EPS) of kr4.97 in 2020. So it’s pretty clear that, although analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
The consensus price target rose 12% to kr150 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of NIBE Industrier’s earnings by assigning a price premium. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic NIBE Industrier analyst has a price target of kr185 per share, while the most pessimistic values it at kr99.00. This shows there is still quite 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 to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that NIBE Industrier’s revenue growth is expected to slow, with forecast 10% increase next year well below the historical 17%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.6% next year. So it’s pretty clear that, while NIBE Industrier’s revenue growth is expected to slow, it’s still expected to grow faster than the market itself.
The Bottom Line
The most obvious conclusion from these results is that there’s been no major change in the business’ prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – and our data does suggest that NIBE Industrier’s revenues are expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn’t be too quick to come to a conclusion on NIBE Industrier. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for NIBE Industrier going out to 2022, and you can see them free on our platform here..
It might also be worth considering whether NIBE Industrier’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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