Yahoo Finance Salvatore Ferragamo S.p.A. Analysts Are Cutting Their Estimates: Here's What You Need To Know
Shareholders in Salvatore Ferragamo S.p.A. (BIT:SFER) had a terrible week, as shares crashed 26% to €9.56 in the week since its latest annual results. It was an okay result overall, with revenues coming in at €1.4b, roughly what analysts had been expecting. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Check out our latest analysis for Salvatore Ferragamo
Taking into account the latest results, the current consensus, from the 13 analysts covering Salvatore Ferragamo, is for revenues of €1.30b in 2020, which would reflect a perceptible 5.6% reduction in Salvatore Ferragamo's sales over the past 12 months. Statutory earnings per share are forecast to tumble 28% to €0.37 in the same period. In the lead-up to this report, analysts had been modelling revenues of €1.40b and earnings per share (EPS) of €0.55 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share forecasts.
The consensus price target fell 12% to €14.52, with the weaker earnings outlook clearly leading analyst valuation estimates. 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. The most optimistic Salvatore Ferragamo analyst has a price target of €18.00 per share, while the most pessimistic values it at €10.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. One thing that stands out from these estimates is that, even though revenues are forecast to keep falling, the decline is expected to accelerate. Analysts have modelled a 5.6% decline next year, compared to a historical decline of 0.4% per annum for the past five years. Compare this with our data on other companies (with analyst coverage) in a similar industry, which in aggregate are forecast to see their revenue decline 4.5% per year. So it looks like Salvatore Ferragamo is also expected to see its revenues decline at a faster rate than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Salvatore Ferragamo. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Salvatore Ferragamo's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Salvatore Ferragamo analysts - going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Salvatore Ferragamo Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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.
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