Industry Analysts Just Upgraded Their Rottneros AB (publ) (STO:RROS) Revenue Forecasts By 13%

Rottneros AB (publ) (STO:RROS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. Investor sentiment seems to be improving too, with the share price up 5.7% to kr13.30 over the past 7 days. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the most recent consensus for Rottneros from its dual analysts is for revenues of kr2.6b in 2022 which, if met, would be a modest 7.6% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to tumble 21% to kr1.58 in the same period. Previously, the analysts had been modelling revenues of kr2.3b and earnings per share (EPS) of kr1.53 in 2022. The forecasts seem more optimistic now, with a solid increase in revenue and a slight bump in earnings per share estimates.

View our latest analysis for Rottneros

Despite these upgrades, the analysts have not made any major changes to their price target of kr12.10, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Rottneros at kr12.50 per share, while the most bearish prices it at kr11.70. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Rottneros is an easy business to forecast or the underlying assumptions are obvious.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Rottneros' growth to accelerate, with the forecast 10% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 1.1% annually. So it's clear with the acceleration in growth, Rottneros is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Rottneros.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Rottneros that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.