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A week ago, Instalco AB (publ) (STO:INSTAL) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was a decent earnings report, with revenues and statutory earnings per share (EPS) both performing well. Revenues were 14% higher thanthe analyst had forecast, at kr1.7b, while EPS of kr1.59 beat analyst models by 12%. The analyst typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analyst is expecting for next year.
Check out our latest analysis for Instalco
Taking into account the latest results, the current consensus from Instalco's sole analyst is for revenues of kr6.55b in 2020, which would reflect a modest 6.5% increase on its sales over the past 12 months. Statutory earnings per share are forecast to reduce 2.1% to kr7.72 in the same period. Yet prior to the latest earnings, the analyst had been anticipated revenues of kr6.38b and earnings per share (EPS) of kr7.37 in 2020. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
With these upgrades, we're not surprised to see that the analyst has lifted their price target 6.4% to kr150 per share.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Instalco's revenue growth is expected to slow, with forecast 6.5% increase next year well below the historical 28%p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.3% next year. So it's pretty clear that, while Instalco's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Instalco's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.