It's been a sad week for Sogefi S.p.A. (BIT:SO), who've watched their investment drop 12% to €1.16 in the week since the company reported its annual result. It was an okay report, and revenues came in at €1.5b, approximately in line with analyst estimates leading up to the results announcement. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, Sogefi's four analysts are forecasting 2020 revenues to be €1.51b, approximately in line with the last 12 months. Statutory earnings per share are expected to bounce 204% to €0.13. Yet prior to the latest earnings, analysts had been forecasting revenues of €1.57b and earnings per share (EPS) of €0.20 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share forecasts.
It'll come as no surprise then, to learn that analysts have cut their price target 6.4% to €1.53. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Sogefi analyst has a price target of €2.00 per share, while the most pessimistic values it at €1.19. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Sogefi's performance in recent years. We would highlight that sales are expected to reverse, with the forecast 0.9% revenue decline a notable change from historical growth of 2.5% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 2.9% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Sogefi to grow slower than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sogefi. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Sogefi's future valuation.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Sogefi analysts - going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Sogefi's balance sheet, and whether we think Sogefi is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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