Epiroc AB (publ) (STO:EPI A) shares fell 4.8% to kr113 in the week since its latest full-year results. It looks like the results were a bit of a negative overall. While revenues of kr41b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.3% to hit kr4.87 per share. Following the result, 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 analysts have changed their mind on Epiroc after the latest results.

See our latest analysis for Epiroc

Taking into account the latest results, the current consensus, from the 14 analysts covering Epiroc, is for revenues of kr39.8b in 2020, which would reflect a discernible 2.6% reduction in Epiroc's sales over the past 12 months. Statutory earnings per share are expected to rise 7.1% to kr5.24. Before this earnings report, analysts had been forecasting revenues of kr41.2b and earnings per share (EPS) of kr5.53 in 2020. It's pretty clear that analyst sentiment has fallen after the latest results, leading to lower revenue forecasts and a small dip in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the kr110 price target, showing that analysts don't think the changes have a meaningful impact on the stock's intrinsic 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 Epiroc at kr131 per share, while the most bearish prices it at kr95.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Epiroc's past performance and to peers in the same market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.6% a significant reduction from annual growth of 14% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 1.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Epiroc 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 Epiroc. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Epiroc. Long-term earnings power is much more important than next year's profits. We have forecasts for Epiroc going out to 2022, and you can see them free on our platform here.

You can also see our analysis of Epiroc's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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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