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Ringkjøbing Landbobank A/S Just Beat EPS By 98%: Here's What Analysts Think Will Happen Next

Ringkjøbing Landbobank A/S (CPH:RILBA) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of ø541m, some 9.4% above estimates, and statutory earnings per share (EPS) coming in at ø5.40, 98% ahead of expectations. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Ringkjøbing Landbobank

CPSE:RILBA Past and Future Earnings May 4th 2020
CPSE:RILBA Past and Future Earnings May 4th 2020

Taking into account the latest results, the most recent consensus for Ringkjøbing Landbobank from three analysts is for revenues of ø2.13b in 2020 which, if met, would be a notable 10% increase on its sales over the past 12 months. Statutory earnings per share are forecast to reduce 2.5% to ø29.08 in the same period. In the lead-up to this report, the analysts had been modelling revenues of ø2.10b and earnings per share (EPS) of ø26.69 in 2020. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

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The consensus price target was unchanged at ø430, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Ringkjøbing Landbobank, with the most bullish analyst valuing it at ø465 and the most bearish at ø390 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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 Ringkjøbing Landbobank's revenue growth is expected to slow, with forecast 10% increase next year well below the historical 20%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.7% next year. Even after the forecast slowdown in growth, it seems obvious that Ringkjøbing Landbobank is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ringkjøbing Landbobank following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at ø430, 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 Ringkjøbing Landbobank. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Ringkjøbing Landbobank analysts - going out to 2022, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Ringkjøbing Landbobank you should be aware of.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.