G5 Entertainment AB (publ) Just Missed EPS By 5.2%: Here's What Analysts Think Will Happen Next

There's been a notable change in appetite for G5 Entertainment AB (publ) (STO:G5EN) shares in the week since its second-quarter report, with the stock down 14% to kr104. It looks like the results were a bit of a negative overall. While revenues of kr288m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 5.2% to hit kr3.02 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for G5 Entertainment

After the latest results, the consensus from G5 Entertainment's two analysts is for revenues of kr1.16b in 2024, which would reflect a measurable 5.5% decline in revenue compared to the last year of performance. Statutory earnings per share are predicted to grow 12% to kr14.42. In the lead-up to this report, the analysts had been modelling revenues of kr1.18b and earnings per share (EPS) of kr14.96 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr230, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 11% annualised decline to the end of 2024. That is a notable change from historical growth of 0.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - G5 Entertainment is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will 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 G5 Entertainment. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

It is also worth noting that we have found 3 warning signs for G5 Entertainment that you need to take into consideration.

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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.