Results: Arjo AB (publ) Beat Earnings Expectations And Analysts Now Have New Forecasts

It's been a good week for Arjo AB (publ) (STO:ARJO B) shareholders, because the company has just released its latest yearly results, and the shares gained 9.8% to kr48.92. The result was positive overall - although revenues of kr11b were in line with what the analysts predicted, Arjo surprised by delivering a statutory profit of kr1.76 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Arjo after the latest results.

View our latest analysis for Arjo

After the latest results, the five analysts covering Arjo are now predicting revenues of kr11.4b in 2024. If met, this would reflect an okay 3.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 31% to kr2.30. Before this earnings report, the analysts had been forecasting revenues of kr11.3b and earnings per share (EPS) of kr2.22 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 rose 8.2% to kr50.60, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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 Arjo analyst has a price target of kr60.00 per share, while the most pessimistic values it at kr35.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Arjo's revenue growth is expected to slow, with the forecast 3.6% annualised growth rate until the end of 2024 being well below the historical 4.7% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 15% per year. Factoring in the forecast slowdown in growth, it seems obvious that Arjo 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 Arjo following these results. 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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 estimates - from multiple Arjo analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Arjo that 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.