Earnings Miss: AB Electrolux (publ) Missed EPS And Analysts Are Revising Their Forecasts
Last week, you might have seen that AB Electrolux (publ) (STO:ELUX B) released its third-quarter result to the market. The early response was not positive, with shares down 2.5% to kr26.17 in the past week. Revenues of kr34b beat expectations by 3.0%. Unfortunately statutory earnings per share (EPS) fell well short of the mark, turning in a loss of kr0.46 compared to previous analyst expectations of a profit. Following the result, the 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on AB Electrolux after the latest results.
Taking into account the latest results, the most recent consensus for AB Electrolux from twelve analysts is for revenues of kr139.5b in 2027. If met, it would imply a satisfactory 7.2% increase on its revenue over the past 12 months. Earnings are expected to improve, with AB Electrolux forecast to report a statutory profit of kr3.97 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr139.1b and earnings per share (EPS) of kr4.36 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
View our latest analysis for AB Electrolux
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 5.9% to kr32.88, suggesting the revised estimates are not indicative of a weaker long-term future for the business. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic AB Electrolux analyst has a price target of kr50.00 per share, while the most pessimistic values it at kr23.10. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that AB Electrolux's rate of growth is expected to accelerate meaningfully, with the forecast 5.7% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 0.4% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 8.8% per year. So it's clear that despite the acceleration in growth, AB Electrolux is expected to grow meaningfully slower than the industry average.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for AB Electrolux. 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 also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for AB Electrolux going out to 2028, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for AB Electrolux (2 are significant) you should be aware of.
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