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Innofactor Plc Just Missed EPS By 44%: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Innofactor Plc (HEL:IFA1V) released its yearly result to the market. The early response was not positive, with shares down 4.9% to €0.82 in the past week. It looks like a pretty bad result, all things considered. Although revenues of €64m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 44% to hit €0.011 per share. 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.

See our latest analysis for Innofactor

HLSE:IFA1V Past and Future Earnings, February 27th 2020
HLSE:IFA1V Past and Future Earnings, February 27th 2020

After the latest results, the only analyst covering Innofactor are now predicting revenues of €66.7m in 2020. If met, this would reflect a modest 3.8% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to leap 77% to €0.02. In the lead-up to this report, analysts had been modelling revenues of €65.7m and earnings per share (EPS) of €0.045 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.

The consensus price target held steady at €0.85, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future.

Further, we can compare these estimates to past performance, and see how Innofactor forecasts compare to the wider market's forecast performance. It's pretty clear that analysts expect Innofactor's revenue growth will slow down substantially, with revenues next year expected to grow 3.8%, compared to a historical growth rate of 8.5% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 13% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Innofactor.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Innofactor. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Innofactor going out as far as 2022, and you can see them free on our platform here.

You can also see whether Innofactor is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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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