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The latest analyst coverage could presage a bad day for SFC Energy AG (ETR:F3C), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the consensus from SFC Energy's four analysts is for revenues of €53m in 2020, which would reflect a chunky 8.9% decline in sales compared to the last year of performance. The loss per share is anticipated to greatly reduce in the near future, narrowing 53% to €0.08. Yet before this consensus update, the analysts had been forecasting revenues of €57m and losses of €0.053 per share in 2020. So it's pretty clear the analysts have mixed opinions on SFC Energy after this update; revenues were downgraded and per-share losses expected to increase.
View our latest analysis for SFC Energy
There was no major change to the consensus price target of €8.06, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values SFC Energy at €10.00 per share, while the most bearish prices it at €6.35. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 8.9% revenue decline a notable change from historical growth of 5.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SFC Energy is expected to lag the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at SFC Energy. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that SFC Energy's revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of SFC Energy.