ATEME SA (EPA:ATEME) Just Reported Earnings, And Analysts Cut Their Target Price

Shareholders of ATEME SA (EPA:ATEME) will be pleased this week, given that the stock price is up 14% to €10.70 following its latest yearly results. It was an okay report, and revenues came in at €66m, approximately in line with analyst estimates leading up to the results announcement. Following the result, the analyst has 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. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.

See our latest analysis for ATEME

Taking into account the latest results, the most recent consensus for ATEME from lone analyst is for revenues of €69.0m in 2020 which, if met, would be a reasonable 4.1% increase on its sales over the past 12 months. Statutory earnings per share are predicted to grow 13% to €0.40. Before this earnings result, the analyst had predicted €77.7m revenue in 2020, although there was no accompanying EPS estimate. So we can see that while the consensus made a substantial drop in revenue estimates, it also began providing earnings per share estimates, suggesting a renewed focus on the business' earnings following the latest result.

The analyst has cut their price target 11% to €15.50 per share, suggesting that the declining revenue was a more crucial indicator than the expected improvement in earnings.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that ATEME's revenue growth is expected to slow, with forecast 4.1% increase next year well below the historical 21%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 14% next year. Factoring in the forecast slowdown in growth, it seems obvious that ATEME is also expected to grow slower than other industry participants.

The Bottom Line

Probably the biggest thing to take away from these latest forecasts is that brokers are definitely optimistic on the business, given the forecast for profitability next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.

It is also worth noting that we have found 1 warning sign for ATEME that you need to take into consideration.

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