Earnings Update: SAS AB (publ) (STO:SAS) Just Reported And Analysts Are Trimming Their Forecasts

SAS AB (publ) (STO:SAS) just released its latest second-quarter report and things are not looking great. Revenues missed expectations somewhat, coming in at kr1.9b and leading to a corresponding blowout in statutory losses. The loss per share was kr0.35, some 17% larger than the analysts forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for SAS

Taking into account the latest results, the most recent consensus for SAS from three analysts is for revenues of kr12.5b in 2021 which, if met, would be a sizeable 29% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 60% to kr0.99. Before this latest report, the consensus had been expecting revenues of kr15.8b and kr0.59 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target was broadly unchanged at kr1.32, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values SAS at kr1.75 per share, while the most bearish prices it at kr1.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SAS' past performance and to peers in the same industry. One thing stands out from these estimates, which is that SAS is forecast to grow faster in the future than it has in the past, with revenues expected to display 65% annualised growth until the end of 2021. If achieved, this would be a much better result than the 9.4% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 31% per year. So it looks like SAS is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at SAS. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at kr1.32, 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 forecasts for SAS going out to 2023, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for SAS you should know about.

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