Stock Futures – Sandvik AB (STO:SAND) Just Reported And Analysts Have Been Lifting Their price Targets

The yearly results for Sandvik AB (STO:SAND) were released last week, making it a good time to revisit its performance. The result was positive overall – although revenues of kr86b were in line with what the analysts predicted, Sandvik surprised by delivering a statutory profit of kr6.98 per share, modestly greater than 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sandvik after the latest results.

See our latest analysis for Sandvik

Taking into account the latest results, the most recent consensus for Sandvik from 21 analysts is for revenues of kr92.9b in 2021 which, if met, would be a modest 7.5% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 48% to kr10.36. In the lead-up to this report, the analysts had been modelling revenues of kr91.5b and earnings per share (EPS) of kr9.88 in 2021. So the consensus seems to have become somewhat more optimistic on Sandvik’s earnings potential following these results.

The consensus price target rose 8.2% to kr225, suggesting that higher earnings estimates flow through to the stock’s valuation as well. 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. The most optimistic Sandvik analyst has a price target of kr275 per share, while the most pessimistic values it at kr158. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 Sandvik’s growth to accelerate, with the forecast 7.5% growth ranking favourably alongside historical growth of 3.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.0% next year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Sandvik is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sandvik’s earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have estimates – from multiple Sandvik analysts – going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Sandvik that we have uncovered.

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This article by Simply Wall St is general in nature. 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.
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