It’s been a good week for Knorr-Bremse AG (ETR:KBX) shareholders, because the company has just released its latest quarterly results, and the shares gained 8.3% to €74.70. Knorr-Bremse reported €2.0b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of €0.95 beat expectations, being 3.2% higher than what the analysts expected. The analysts 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. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Knorr-Bremse
After the latest results, the consensus from Knorr-Bremse’s 14 analysts is for revenues of €7.91b in 2024, which would reflect a discernible 2.5% decline in revenue compared to the last year of performance. Per-share earnings are expected to rise 7.9% to €3.86. Before this earnings report, the analysts had been forecasting revenues of €7.88b and earnings per share (EPS) of €3.71 in 2024. So the consensus seems to have become somewhat more optimistic on Knorr-Bremse’s earnings potential following these results.
There’s been no major changes to the consensus price target of €72.50, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s 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. Currently, the most bullish analyst values Knorr-Bremse at €87.00 per share, while the most bearish prices it at €48.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.3% by the end of 2024. This indicates a significant reduction from annual growth of 3.6% 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 4.2% annually for the foreseeable future. It’s pretty clear that Knorr-Bremse’s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Knorr-Bremse’s earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at €72.50, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Knorr-Bremse analysts – going out to 2026, and you can see them free on our platform here.
We don’t want to rain on the parade too much, but we did also find 1 warning sign for Knorr-Bremse that you need to be mindful of.
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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.