Projektengagemang Sweden AB (publ) (STO:PENG B) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasts. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at kr245m, statutory earnings missed forecasts by an incredible 39%, coming in at just kr0.37 per share. The analyst 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've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.
Taking into account the latest results, Projektengagemang Sweden's lone analyst currently expect revenues in 2022 to be kr951.0m, approximately in line with the last 12 months. Statutory earnings per share are predicted to soar 51% to kr1.18. In the lead-up to this report, the analyst had been modelling revenues of kr985.8m and earnings per share (EPS) of kr1.58 in 2022. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
It'll come as no surprise then, to learn that the analyst has cut their price target 13% to kr23.00.
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. It's also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues to the end of 2022. Historically, Projektengagemang Sweden's sales have shrunk approximately 2.7% annually over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.0% per year. Although Projektengagemang Sweden's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.
The Bottom Line
The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Projektengagemang Sweden. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
Even so, be aware that Projektengagemang Sweden is showing 4 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
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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.