It's been a good week for NIBE Industrier AB (publ) (STO:NIBE B) shareholders, because the company has just released its latest third-quarter results, and the shares gained 3.7% to kr141. NIBE Industrier reported in line with analyst predictions, delivering revenues of kr6.3b and earnings per share of kr1.25, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
Following the latest results, NIBE Industrier's five analysts are now forecasting revenues of kr27.5b in 2020. This would be a solid 12% improvement in sales compared to the last 12 months. Earnings per share are expected to step up 14% to kr4.95. Yet prior to the latest earnings, analysts had been forecasting revenues of kr26.8b and earnings per share (EPS) of kr4.88 in 2020. So it looks like there's been no major change in sentiment following the latest results, although analysts have made a slight bump in to revenue forecasts.
Analysts increased their price target 8.6% to kr121, perhaps signalling that higher revenues are a strong leading indicator for NIBE Industrier's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on NIBE Industrier, with the most bullish analyst valuing it at kr140 and the most bearish at kr94.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Further, we can compare these estimates to past performance, and see how NIBE Industrier forecasts compare to the wider market's forecast performance. We would highlight that NIBE Industrier's revenue growth is expected to slow, with forecast 12% increase next year well below the historical 17%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.2% next year. So it's pretty clear that, while NIBE Industrier's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on NIBE Industrier. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for NIBE Industrier going out to 2021, and you can see them free on our platform here..
You can also see whether NIBE Industrier is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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