Ratos AB (publ) Just Missed Earnings - But Analysts Have Updated Their Models

Investors in Ratos AB (publ) (STO:RATO B) had a good week, as its shares rose 9.3% to close at kr38.60 following the release of its quarterly results. It looks like a pretty bad result, all things considered. Although revenues of kr7.8b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 65% to hit kr0.06 per share. The analysts 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Ratos

Following last week's earnings report, Ratos' two analysts are forecasting 2024 revenues to be kr33.7b, approximately in line with the last 12 months. Statutory earnings per share are expected to plummet 28% to kr2.81 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr34.7b and earnings per share (EPS) of kr3.19 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

The analysts made no major changes to their price target of kr42.50, suggesting the downgrades are not expected to have a long-term impact on Ratos' valuation.

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. We would highlight that revenue is expected to reverse, with a forecast 0.1% annualised decline to the end of 2024. That is a notable change from historical growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 13% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ratos is expected to lag the wider industry.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Ratos. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Ratos that you need to be mindful of.

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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.