Sandvik AB (publ) Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Sandvik AB (publ) (STO:SAND) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to kr214 in the week after its latest second-quarter results. It was not a great result overall. While revenues of kr31b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 19% to hit kr2.76 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Sandvik

Taking into account the latest results, Sandvik's 19 analysts currently expect revenues in 2024 to be kr125.3b, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 7.6% to kr11.03. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr124.9b and earnings per share (EPS) of kr11.08 in 2024. 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.

The analysts reconfirmed their price target of kr238, showing that the business is executing well and in line with expectations. 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. The most optimistic Sandvik analyst has a price target of kr300 per share, while the most pessimistic values it at kr152. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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 Sandvik's revenue growth is expected to slow, with the forecast 2.6% annualised growth rate until the end of 2024 being well below the historical 6.6% 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 4.5% 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 Sandvik.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at kr238, 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. We have estimates - from multiple Sandvik analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Sandvik , and understanding them should be part of your investment process.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com