Yahoo Finance Covestro AG Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
Shareholders might have noticed that Covestro AG (ETR:1COV) filed its third-quarter result this time last week. The early response was not positive, with shares down 3.8% to €34.58 in the past week. Results overall were not great, with earnings of €0.06 per share falling drastically short of analyst expectations. Meanwhile revenues hit €4.6b and were slightly better than forecasts. 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. 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 Covestro
Taking into account the latest results, the 17 analysts covering Covestro provided consensus estimates of €16.4b revenue in 2023, which would reflect an uneasy 11% decline on its sales over the past 12 months. Statutory earnings per share are expected to dive 62% to €1.81 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €16.1b and earnings per share (EPS) of €2.44 in 2023. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at €41.79, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Covestro analyst has a price target of €57.00 per share, while the most pessimistic values it at €31.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 8.7% by the end of 2023. This indicates a significant reduction from annual growth of 3.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.8% per year. It's pretty clear that Covestro'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 Covestro'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 in mind, we wouldn't be too quick to come to a conclusion on Covestro. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Covestro analysts - going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Covestro that we have uncovered.
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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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