Paradox Interactive AB (publ) Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

The analysts might have been a bit too bullish on Paradox Interactive AB (publ) (STO:PDX), given that the company fell short of expectations when it released its first-quarter results last week. Paradox Interactive missed analyst forecasts, with revenues of kr482m and statutory earnings per share (EPS) of kr1.20, falling short by 7.6% and 9.5% respectively. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Paradox Interactive

After the latest results, the four analysts covering Paradox Interactive are now predicting revenues of kr2.78b in 2024. If met, this would reflect an okay 5.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 30% to kr6.57. Before this earnings report, the analysts had been forecasting revenues of kr2.80b and earnings per share (EPS) of kr7.34 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr245, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 kr270 and the most bearish at kr220 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. We would highlight that Paradox Interactive's revenue growth is expected to slow, with the forecast 7.2% 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) 3.7% per year. So it's pretty clear that, while Paradox Interactive's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. 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 kr245, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Paradox Interactive going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Paradox Interactive that you need to be mindful of.

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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.