Earnings Miss: Billerud AB (publ) Missed EPS By 48% And Analysts Are Revising Their Forecasts

Investors in Billerud AB (publ) (STO:BILL) had a good week, as its shares rose 7.1% to close at kr98.00 following the release of its yearly results. Statutory earnings per share fell badly short of expectations, coming in at kr1.95, some 48% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at kr41b. 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 Billerud

Following last week's earnings report, Billerud's seven analysts are forecasting 2024 revenues to be kr41.8b, approximately in line with the last 12 months. Per-share earnings are expected to jump 211% to kr6.05. Before this earnings report, the analysts had been forecasting revenues of kr41.7b and earnings per share (EPS) of kr6.56 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 minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr103, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Billerud, with the most bullish analyst valuing it at kr126 and the most bearish at kr83.00 per share. 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.

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. It's pretty clear that there is an expectation that Billerud's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.4% growth on an annualised basis. This is compared to a historical growth rate of 15% 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 2.2% 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 Billerud.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Billerud. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Billerud's revenue is expected to perform worse than the wider industry. The consensus price target held steady at kr103, 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 Billerud. Long-term earnings power is much more important than next year's profits. We have forecasts for Billerud going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Billerud (at least 1 which is significant) , and understanding these should be part of your investment process.

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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.