There's been a notable change in appetite for Safran SA (EPA:SAF) shares in the week since its full-year report, with the stock down 14% to €124. It was a pretty mixed result, with revenues beating expectations to hit €25b. Statutory earnings fell 6.4% short of analyst forecasts, reaching €5.63 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Safran after the latest results.
After the latest results, the consensus from Safran's 14 analysts is for revenues of €24.1b in 2020, which would reflect a discernible 4.6% decline in sales compared to the last year of performance. Statutory earnings per share are expected to swell 18% to €6.69. Yet prior to the latest earnings, analysts had been forecasting revenues of €24.8b and earnings per share (EPS) of €6.62 in 2020. So it looks like analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is expected to maintain EPS.
The consensus has reconfirmed its price target of €149, showing that analysts don't expect weaker sales expectations next year to have a material impact on Safran's market value. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Safran at €178 per share, while the most bearish prices it at €105. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Further, we can compare these estimates to past performance, and see how Safran forecasts compare to the wider market's forecast performance. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.6% a significant reduction from annual growth of 9.1% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 3.2% next year. It's pretty clear that Safran's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Still, earnings are more important to the long-term value of the business. The consensus price target held steady at €149, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Safran analysts - going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether Safran's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.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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