It's been a good week for DEUTZ Aktiengesellschaft (ETR:DEZ) shareholders, because the company has just released its latest third-quarter results, and the shares gained 2.7% to €4.04. Results were roughly in line with estimates, with revenues of €465m and statutory earnings per share of €0.32. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on DEUTZ after the latest results.
Taking into account the latest results, DEUTZ's five analysts currently expect revenues in 2023 to be €1.83b, approximately in line with the last 12 months. Statutory earnings per share are forecast to reduce 5.7% to €0.46 in the same period. In the lead-up to this report, the analysts had been modelling revenues of €1.83b and earnings per share (EPS) of €0.49 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at €6.54, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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 DEUTZ at €7.02 per share, while the most bearish prices it at €5.50. This is a very narrow spread of estimates, implying either that DEUTZ is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the DEUTZ's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 0.5% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 0.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.0% annually for the foreseeable future. It's pretty clear that DEUTZ's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that DEUTZ's revenues are expected to perform worse than the wider industry. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for DEUTZ going out to 2024, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for DEUTZ 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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