Securitas AB Just Missed Earnings - But Analysts Have Updated Their Models

Securitas AB (STO:SECU B) shareholders are probably feeling a little disappointed, since its shares fell 4.1% to kr124 in the week after its latest annual results. It looks like the results were a bit of a negative overall. While revenues of kr108b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 7.0% to hit kr6.63 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Securitas

Taking into account the latest results, Securitas' 18 analysts currently expect revenues in 2021 to be kr109.0b, approximately in line with the last 12 months. Statutory earnings per share are predicted to soar 23% to kr8.14. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr109.9b and earnings per share (EPS) of kr8.61 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at kr138, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Securitas analyst has a price target of kr169 per share, while the most pessimistic values it at kr100.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Securitas' revenue growth will slow down substantially, with revenues next year expected to grow 0.9%, compared to a historical growth rate of 6.9% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.5% next year. Factoring in the forecast slowdown in growth, it seems obvious that Securitas is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Securitas' revenues are expected to perform worse than the wider industry. The consensus price target held steady at kr138, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Securitas analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Securitas that we have uncovered.

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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. 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.
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