Today is shaping up negative for A.S. Création Tapeten AG (ETR:ACWN) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analyst signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the latest downgrade, the one analyst covering A.S. Création Tapeten provided consensus estimates of €130m revenue in 2020, which would reflect a measurable 7.3% decline on its sales over the past 12 months. Before this latest update, the analyst had been forecasting revenues of €148m and earnings per share (EPS) of €1.01 in 2020. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a minor adjustment to earnings per share numbers as well.
There was no particular change to the consensus price target of €23.00, with A.S. Création Tapeten's latest outlook seemingly not enough to result in a change of valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing that stands out from these estimates is that revenues are expected to keep falling, roughly in line with the historical decline of 7.3% per annum over the past five years. Compare this with our data on other companies (with analyst coverage) in the industry, which in aggregate are forecast to see their revenue grow 3.8% next year. It seems clear that while the revenue forecasts are all negative, A.S. Création Tapeten's revenue decline is expected to be less severe than that of the industry itself.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that A.S. Création Tapeten's revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on A.S. Création Tapeten after today.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2024, which can be seen for 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.
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