Arjo AB (publ) (STO:ARJO B) Just Released Its Second-Quarter Results And Analysts Are Updating Their Estimates

Arjo AB (publ) (STO:ARJO B) came out with its second-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues of kr2.8b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at kr0.44, missing estimates by 4.7%. 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.

View our latest analysis for Arjo

Taking into account the latest results, Arjo's five analysts currently expect revenues in 2024 to be kr11.4b, approximately in line with the last 12 months. Per-share earnings are expected to grow 16% to kr2.18. In the lead-up to this report, the analysts had been modelling revenues of kr11.4b and earnings per share (EPS) of kr2.27 in 2024. 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 kr51.80, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Arjo at kr58.00 per share, while the most bearish prices it at kr42.00. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Arjo's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.2% growth on an annualised basis. This is compared to a historical growth rate of 5.1% 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 16% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Arjo.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Arjo. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Arjo's revenue is expected to 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 Arjo. Long-term earnings power is much more important than next year's profits. We have forecasts for Arjo going out to 2026, and you can see them free on our platform here.

Even so, be aware that Arjo is showing 2 warning signs in our investment analysis , 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.

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