Analysts Are Updating Their 1&1 Drillisch AG (ETR:DRI) Estimates After Its Annual Results
It's been a good week for 1&1 Drillisch AG (ETR:DRI) shareholders, because the company has just released its latest yearly results, and the shares gained 7.1% to €17.94. 1&1 Drillisch reported €3.7b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of €2.12 beat expectations, being 4.4% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for 1&1 Drillisch
Taking into account the latest results, the consensus forecast from 1&1 Drillisch's 13 analysts is for revenues of €3.82b in 2020, which would reflect a satisfactory 4.0% improvement in sales compared to the last 12 months. Statutory per share are forecast to be €2.10, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of €3.81b and earnings per share (EPS) of €2.06 in 2020. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of €32.75, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic 1&1 Drillisch analyst has a price target of €49.00 per share, while the most pessimistic values it at €15.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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 1&1 Drillisch's revenue growth is expected to slow, with forecast 4.0% increase next year well below the historical 15%p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.0% next year. Even after the forecast slowdown in growth, it seems obvious that 1&1 Drillisch is also expected to grow 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 1&1 Drillisch following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on 1&1 Drillisch. Long-term earnings power is much more important than next year's profits. We have forecasts for 1&1 Drillisch going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for 1&1 Drillisch that you need to be mindful of.
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