Embracer Group AB (publ) Just Recorded A 262% EPS Beat: Here's What Analysts Are Forecasting Next

As you might know, Embracer Group AB (publ) (STO:EMBRAC B) just kicked off its latest quarterly results with some very strong numbers. Embracer Group delivered a significant beat to revenue and earnings per share (EPS) expectations, hitting kr10b-13% above indicated-andkr1.23-262% above forecasts- respectively This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Embracer Group

After the latest results, the 13 analysts covering Embracer Group are now predicting revenues of kr42.3b in 2024. If met, this would reflect a credible 3.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to plunge 70% to kr1.56 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr41.7b and earnings per share (EPS) of kr1.27 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.

The consensus price target was unchanged at kr36.33, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. There are some variant perceptions on Embracer Group, with the most bullish analyst valuing it at kr68.00 and the most bearish at kr27.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Embracer Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.1% growth on an annualised basis. This is compared to a historical growth rate of 49% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.4% per year. Factoring in the forecast slowdown in growth, it seems obvious that Embracer Group is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Embracer Group's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at kr36.33, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Embracer Group analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 4 warning signs for Embracer Group (2 are concerning!) that you should be aware of.

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

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.