Fresenius SE & Co. KGaA (ETR:FRE) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Results were good overall, with revenues beating analyst predictions by 2.3% to hit €9.1b. Statutory earnings per share (EPS) came in at €0.82, some 8.1% above whatthe analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus, from the 20 analysts covering Fresenius SE KGaA, is for revenues of €35.2b in 2020, which would reflect a perceptible 2.2% reduction in Fresenius SE KGaA's sales over the past 12 months. Statutory earnings per share are forecast to tumble 28% to €2.45 in the same period. In the lead-up to this report, the analysts had been modelling revenues of €37.0b and earnings per share (EPS) of €3.27 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the €51.48 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Fresenius SE KGaA, with the most bullish analyst valuing it at €64.00 and the most bearish at €18.06 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 2.2% revenue decline a notable change from historical growth of 6.8% 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 5.8% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Fresenius SE KGaA is expected to lag 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 Fresenius SE KGaA. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at €51.48, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Fresenius SE KGaA. 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 Fresenius SE KGaA going out to 2024, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Fresenius SE KGaA (1 is a bit concerning) you should be aware of.
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