Earnings Beat: Ambea AB (publ) Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a good week for Ambea AB (publ) (STO:AMBEA) shareholders, because the company has just released its latest quarterly results, and the shares gained 8.4% to kr68.75. It looks like a credible result overall - although revenues of kr3.5b were what the analysts expected, Ambea surprised by delivering a (statutory) profit of kr1.25 per share, an impressive 25% above what was forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Ambea

Taking into account the latest results, the most recent consensus for Ambea from three analysts is for revenues of kr13.9b in 2024. If met, it would imply a satisfactory 2.6% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 8.6% to kr6.01. In the lead-up to this report, the analysts had been modelling revenues of kr13.9b and earnings per share (EPS) of kr5.61 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at kr79.67, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Ambea at kr85.00 per share, while the most bearish prices it at kr76.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Ambea's revenue growth is expected to slow, with the forecast 3.4% annualised growth rate until the end of 2024 being well below the historical 7.9% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. Factoring in the forecast slowdown in growth, it seems obvious that Ambea is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ambea following these results. On the plus side, there were no major changes to revenue estimates; although 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 Ambea. Long-term earnings power is much more important than next year's profits. We have forecasts for Ambea going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Ambea has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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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.