Earnings Miss: Magnolia Bostad AB (publ) Missed EPS By 25% And Analysts Are Revising Their Forecasts
It's been a good week for Magnolia Bostad AB (publ) (STO:MAG) shareholders, because the company has just released its latest yearly results, and the shares gained 3.6% to kr51.20. Results overall were not great, with earnings of kr3.75 per share falling drastically short of analyst expectations. Meanwhile revenues hit kr751m and were slightly better than forecasts. Following the result, 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 analysts are expecting for next year.
View our latest analysis for Magnolia Bostad
Taking into account the latest results, the current consensus from Magnolia Bostad's three analysts is for revenues of kr1.54b in 2020, which would reflect a huge 105% increase on its sales over the past 12 months. Statutory earnings per share are expected to shoot up 65% to kr6.17. Yet prior to the latest earnings, analysts had been forecasting revenues of kr1.51b and earnings per share (EPS) of kr4.39 in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.
Analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 6.9% to kr57.00. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Magnolia Bostad at kr66.00 per share, while the most bearish prices it at kr45.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Magnolia Bostad's performance in recent years. Analysts are definitely expecting Magnolia Bostad's growth to accelerate, with the forecast 105% growth ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 6.5% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Magnolia Bostad is expected to grow much faster than its market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Magnolia Bostad's earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Magnolia Bostad's revenues are expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Magnolia Bostad going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Magnolia Bostad's balance sheet, and whether we think Magnolia Bostad is carrying too much debt, for free on our platform 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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