Earnings Release: Here's Why Analysts Cut Their Roche Bobois S.A. (EPA:RBO) Price Target To €18.47
Roche Bobois S.A. (EPA:RBO) shareholders are probably feeling a little disappointed, since its shares fell 2.5% to €13.65 in the week after its latest yearly results. It was an okay report, and revenues came in at €275m, 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 the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Roche Bobois
Taking into account the latest results, the current consensus, from the three analysts covering Roche Bobois, is for revenues of €265.3m in 2020, which would reflect a measurable 3.4% reduction in Roche Bobois's sales over the past 12 months. Statutory earnings per share are predicted to shoot up 35% to €1.19. In the lead-up to this report, the analysts had been modelling revenues of €289.6m and earnings per share (EPS) of €1.19 in 2020. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The average price target was reduced 5.8% to €18.47, with the lower revenue forecasts indicating negative sentiment towards Roche Bobois, even though earnings forecasts were unchanged. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Roche Bobois analyst has a price target of €20.00 per share, while the most pessimistic values it at €15.40. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that Roche Bobois is an easy business to forecast or that the the analysts are all using similar assumptions.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.4%, a significant reduction from annual growth of 3.4% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.7% next year. It's pretty clear that Roche Bobois's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Even so, earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Roche Bobois. Long-term earnings power is much more important than next year's profits. We have forecasts for Roche Bobois going out to 2021, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Roche Bobois that you should be aware of.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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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