It’s been a mediocre week for Kudelski SA (VTX:KUD) shareholders, with the stock dropping 14% to CHF4.49 in the week since its latest annual results. Revenues of US$827m came in a modest 5.5% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of US$0.81 coming in a substantial 53% smaller than what analysts had expected. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts 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 analysts are expecting for next year.
Check out our latest analysis for Kudelski
SWX:KUD Past and Future Earnings, March 1st 2020
Following the latest results, Kudelski’s three analysts are now forecasting revenues of US$848.9m in 2020. This would be a satisfactory 2.6% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Kudelski forecast to report a statutory profit of US$0.26 per share. In the lead-up to this report, analysts had been modelling revenues of US$894.8m and earnings per share (EPS) of US$0.42 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share forecasts.
Analysts made no major changes to their price target of CHF4.84, suggesting the downgrades are not expected to have a long-term impact on Kudelski’s valuation. 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 Kudelski analyst has a price target of CHF5.90 per share, while the most pessimistic values it at CHF4.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Kudelski’s performance in recent years. One thing stands out from these estimates, which is that analysts are forecasting Kudelski to grow faster in the future than it has in the past, with revenues expected to grow 2.6%. If achieved, this would be a much better result than the 1.7% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 6.7% next year. Although Kudelski’s revenues are expected to improve, it seems that analysts are still bearish on the business, forecasting it to grow slower than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Kudelski. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$4.84, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
With that in mind, we wouldn’t be too quick to come to a conclusion on Kudelski. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Kudelski going out to 2022, and you can see them free on our platform here..
You can also view our analysis of Kudelski’s balance sheet, and whether we think Kudelski is carrying too much debt, for free on our platform here.
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