Revenue Miss: engcon AB (publ) Fell 7.2% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models
There's been a notable change in appetite for engcon AB (publ) (STO:ENGCON B) shares in the week since its third-quarter report, with the stock down 18% to kr59.30. Revenues came in 7.2% below expectations, at kr435m. Statutory earnings per share were relatively better off, with a per-share profit of kr0.45 being roughly in line with analyst estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from engcon's four analysts is for revenues of kr2.38b in 2027. This reflects a solid 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 41% to kr2.48. In the lead-up to this report, the analysts had been modelling revenues of kr2.54b and earnings per share (EPS) of kr2.67 in 2027. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
See our latest analysis for engcon
The consensus price target fell 8.1% to kr73.75, with the weaker earnings outlook clearly leading valuation estimates. 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. The most optimistic engcon analyst has a price target of kr83.00 per share, while the most pessimistic values it at kr65.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that engcon's rate of growth is expected to accelerate meaningfully, with the forecast 12% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 2.1% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 8.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that engcon is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for engcon. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of engcon's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on engcon. Long-term earnings power is much more important than next year's profits. We have forecasts for engcon going out to 2028, and you can see them free on our platform here.
It might also be worth considering whether engcon's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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