Today is shaping up negative for SES-imagotag Société Anonyme (EPA:SESL) shareholders, with the analysts delivering a substantial negative revision to this year’s forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the most recent consensus for SES-imagotag Société Anonyme from its three analysts is for revenues of €265m in 2020 which, if met, would be an okay 6.9% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 46% to €0.24. Before this latest update, the analysts had been forecasting revenues of €380m and earnings per share (EPS) of €0.38 in 2020. There looks to have been a major change in sentiment regarding SES-imagotag Société Anonyme’s prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.
The consensus price target fell 25% to €27.83, implicitly signalling that lower earnings per share are a leading indicator for SES-imagotag Société Anonyme’s valuation. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic SES-imagotag Société Anonyme analyst has a price target of €30.00 per share, while the most pessimistic values it at €26.50. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
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 pretty clear that there is an expectation that SES-imagotag Société Anonyme’s revenue growth will slow down substantially, with revenues next year expected to grow 6.9%, compared to a historical growth rate of 18% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.8% next year. So it’s pretty clear that, while SES-imagotag Société Anonyme’s revenue growth is expected to slow, it’s expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that analysts are expecting SES-imagotag Société Anonyme to become unprofitable this year. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. With a serious cut to this year’s expectations and a falling price target, we wouldn’t be surprised if investors were becoming wary of SES-imagotag Société Anonyme.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple SES-imagotag Société Anonyme analysts – going out to 2021, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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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