As you might know, Adecco Group AG (VTX:ADEN) recently reported its yearly numbers. It was not a great result overall. While revenues of €24b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 12% to hit €2.05 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, Adecco Group's eleven analysts currently expect revenues in 2023 to be €23.5b, approximately in line with the last 12 months. Statutory earnings per share are expected to sink 11% to €1.84 in the same period. Before this earnings report, the analysts had been forecasting revenues of €22.8b and earnings per share (EPS) of €1.97 in 2023. So it's pretty clear consensus is mixed on Adecco Group after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
The consensus price target was unchanged at CHF37.55, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Adecco Group analyst has a price target of CHF70.91 per share, while the most pessimistic values it at CHF29.24. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Adecco Group's past performance and to peers in the same industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2023 compared to the historical decline of 2.4% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.4% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Adecco Group to suffer worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Adecco Group. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at CHF37.55, 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. At Simply Wall St, we have a full range of analyst estimates for Adecco Group going out to 2025, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 3 warning signs for Adecco Group (1 is a bit unpleasant!) that 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.
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