Ratos AB (publ) Recorded A 6.4% Miss On Revenue: Analysts Are Revisiting Their Models

There's been a notable change in appetite for Ratos AB (publ) (STO:RATO B) shares in the week since its quarterly report, with the stock down 11% to kr34.26. Results look mixed - while revenue fell marginally short of analyst estimates at kr9.1b, statutory earnings were in line with expectations, at kr1.85 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Ratos after the latest results.

See our latest analysis for Ratos

Taking into account the latest results, Ratos' twin analysts currently expect revenues in 2024 to be kr32.4b, approximately in line with the last 12 months. Statutory earnings per share are expected to tumble 33% to kr2.63 in the same period. In the lead-up to this report, the analysts had been modelling revenues of kr33.3b and earnings per share (EPS) of kr2.80 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the kr42.50 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.7% by the end of 2024. This indicates a significant reduction from annual growth of 12% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. It's pretty clear that Ratos' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ratos. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at kr42.50, with the latest estimates not enough to have an impact on their price targets.

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. We have analyst estimates for Ratos going out as far as 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Ratos has 2 warning signs we think you should be aware 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.

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