Paradox Interactive AB (publ) (STO:PDX) Just Reported Second-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?
Paradox Interactive AB (publ) (STO:PDX) shareholders are probably feeling a little disappointed, since its shares fell 3.1% to kr136 in the week after its latest quarterly results. It was a credible result overall, with revenues of kr524m and statutory earnings per share of kr1.41 both in line with analyst estimates, showing that Paradox Interactive is executing in line with expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Paradox Interactive after the latest results.
After the latest results, the consensus from Paradox Interactive's six analysts is for revenues of kr2.16b in 2026, which would reflect a measurable 3.0% decline in revenue compared to the last year of performance. Per-share earnings are expected to jump 368% to kr5.60. In the lead-up to this report, the analysts had been modelling revenues of kr2.18b and earnings per share (EPS) of kr5.71 in 2026. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
Check out our latest analysis for Paradox Interactive
It might be a surprise to learn that the consensus price target was broadly unchanged at kr155, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Paradox Interactive analyst has a price target of kr170 per share, while the most pessimistic values it at kr137. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 5.8% annualised decline to the end of 2026. That is a notable change from historical growth of 7.2% 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 9.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Paradox Interactive 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Paradox Interactive analysts - going out to 2028, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Paradox Interactive (1 can't be ignored!) that you need to take into consideration.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.