Paradox Interactive AB (publ) Beat Revenue Forecasts By 5.0%: Here's What Analysts Are Forecasting Next

Paradox Interactive AB (publ) (STO:PDX) came out with its yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Paradox Interactive beat revenue expectations by 5.0%, at kr2.6b. Statutory earnings per share (EPS) came in at kr4.99, some 4.0% short of analyst estimates. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Paradox Interactive

Taking into account the latest results, the consensus forecast from Paradox Interactive's four analysts is for revenues of kr2.80b in 2024. This reflects a reasonable 5.9% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 56% to kr7.83. In the lead-up to this report, the analysts had been modelling revenues of kr2.78b and earnings per share (EPS) of kr8.16 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.

The consensus price target held steady at kr256, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Paradox Interactive, with the most bullish analyst valuing it at kr280 and the most bearish at kr220 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Paradox Interactive's revenue growth is expected to slow, with the forecast 5.9% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.6% per year. Even after the forecast slowdown in growth, it seems obvious that Paradox Interactive is also expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Paradox Interactive. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at kr256, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Paradox Interactive analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that Paradox Interactive is showing 2 warning signs in our investment analysis , you should know about...

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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.