Earnings Beat: Neste Oyj Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

As you might know, Neste Oyj (HEL:NESTE) just kicked off its latest annual results with some very strong numbers. Results were good overall, with revenues beating analyst predictions by 5.8% to hit €15b. Statutory earnings per share (EPS) came in at €2.30, some 8.0% above whatthe analysts had expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Neste Oyj

Taking into account the latest results, the current consensus from Neste Oyj’s 16 analysts is for revenues of €17.7b in 2022, which would reflect a decent 17% increase on its sales over the past 12 months. Statutory earnings per share are expected to dive 27% to €1.69 in the same period. In the lead-up to this report, the analysts had been modelling revenues of €15.7b and earnings per share (EPS) of €1.85 in 2022. While revenue forecasts have increased substantially, the analysts are a little more pessimistic on earnings, suggesting that the growth in revenue does not come without cost.

There’s been no major changes to the price target of €52.92, suggesting that the impact of higher forecast sales and lower earnings won’t result in a meaningful change to the business’ valuation. 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 Neste Oyj analyst has a price target of €75.00 per share, while the most pessimistic values it at €37.00. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Neste Oyj’s growth to accelerate, with the forecast 17% annualised growth to the end of 2022 ranking favourably alongside historical growth of 2.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.4% annually. Factoring in the forecast acceleration in revenue, it’s pretty clear that Neste Oyj is expected to grow much faster than its 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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.

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 estimates – from multiple Neste Oyj analysts – going out to 2024, and you can see them free on our platform here.

That said, it’s still necessary to consider the ever-present spectre of investment risk. We’ve identified 1 warning sign with Neste Oyj , and understanding it should be part of your investment process.

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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.