Earnings Update: Cerved Group S.p.A. (BIT:CERV) Just Reported And Analysts Are Trimming Their Forecasts
The investors in Cerved Group S.p.A.'s (BIT:CERV) will be rubbing their hands together with glee today, after the share price leapt 23% to €6.15 in the week following its full-year results. It was an okay result overall, with revenues coming in at €521m, roughly what the analysts had been expecting. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Cerved Group
Taking into account the latest results, the five analysts covering Cerved Group provided consensus estimates of €458.0m revenue in 2020, which would reflect a chunky 12% decline on its sales over the past 12 months. Statutory earnings per share are forecast to dive 48% to €0.22 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €537.3m and earnings per share (EPS) of €0.45 in 2020. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
It'll come as no surprise then, to learn thatthe analysts have cut their price target 6.7% to €9.12. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Cerved Group analyst has a price target of €10.50 per share, while the most pessimistic values it at €6.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Cerved Group shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 12%, a significant reduction from annual growth of 7.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cerved Group is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Cerved Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Cerved Group going out to 2022, 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 3 warning signs for Cerved Group that you need to be mindful of.
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