kr40.50: That's What Analysts Think Transtema Group AB (STO:TRANS) Is Worth After Its Latest Results

Last week, you might have seen that Transtema Group AB (STO:TRANS) released its second-quarter result to the market. The early response was not positive, with shares down 8.5% to kr16.74 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at kr713m, statutory earnings were in line with expectations, at kr3.27 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Transtema Group after the latest results.

View our latest analysis for Transtema Group

After the latest results, the twin analysts covering Transtema Group are now predicting revenues of kr2.95b in 2023. If met, this would reflect a satisfactory 7.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dive 24% to kr3.76 in the same period. In the lead-up to this report, the analysts had been modelling revenues of kr3.04b and earnings per share (EPS) of kr3.12 in 2023. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the considerable lift to to the earnings per share numbers.

The consensus price target fell 22% to kr40.50, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts.

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 Transtema Group's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.9% per year. Even after the forecast slowdown in growth, it seems obvious that Transtema Group is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Transtema Group following these results. They also downgraded Transtema Group's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Transtema Group's future valuation.

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. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Transtema Group (2 are concerning) you should be aware 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.