Yahoo Finance Salzgitter AG Just Recorded A 5.7% EPS Beat: Here's What Analysts Are Forecasting Next
Investors in Salzgitter AG (ETR:SZG) had a good week, as its shares rose 4.6% to close at €35.60 following the release of its annual results. Salzgitter reported €13b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of €20.00 beat expectations, being 5.7% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Salzgitter
Taking into account the latest results, the nine analysts covering Salzgitter provided consensus estimates of €11.0b revenue in 2023, which would reflect a not inconsiderable 12% decline on its sales over the past 12 months. Statutory earnings per share are forecast to crater 70% to €6.05 in the same period. In the lead-up to this report, the analysts had been modelling revenues of €10.1b and earnings per share (EPS) of €4.84 in 2023. So it seems there's been a definite increase in optimism about Salzgitter's future following the latest results, with a considerable lift to the earnings per share forecasts in particular.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of €35.48, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. Currently, the most bullish analyst values Salzgitter at €45.00 per share, while the most bearish prices it at €21.20. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 12% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 5.1% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 1.5% per year. So it's pretty clear that Salzgitter's revenues are expected to shrink 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 Salzgitter following these results. They also upgraded their revenue estimates, with sales apparently performing well, although revenues are expected to lag the wider industry this year. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Salzgitter analysts - going out to 2025, 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 Salzgitter you should be aware of, and 1 of them is potentially serious.
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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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