Troax Group AB (publ) narrowly missed its earnings forecast – but analysts have updated their models

Troax Group AB (publ) (STO:TROAX) missed the break-even point with its latest quarterly results, disappointing overly optimistic forecasters. Overall, it wasn't a great result – while revenue came in just short of analyst estimates at €72m, statutory profit missed forecasts by a staggering 21%, coming in at just €0.13 per share. This is an important time for investors as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if expectations for the company have changed. Readers will be pleased to know that we've rounded up the latest statutory forecasts to see if analysts have changed their minds about Troax Group following the latest results.

Check out our latest analysis for Troax Group

Following the latest results, the four analysts covering Troax Group are now forecasting revenues of €284.3 million in 2024. If this forecast is met, it would be a credible 5.0% increase in sales compared to the last 12 months. Earnings per share are expected to increase by 4.6% to €0.56. Ahead of this report, analysts had modeled revenues of €291.2 million and earnings per share (EPS) of €0.59 in 2024. Given the reduced revenue forecasts and the marginal downgrade of earnings per share expectations, analysts are less optimistic than they were prior to these results.

The analysts have not made any major changes to their price target of 264 kr, suggesting that the downgrades are not expected to have a long-term impact on Troax Group's valuation. However, another way to look at price targets is by looking at the range of price targets suggested by analysts, as a wide range of estimates could suggest a differing view on possible outcomes for the company. Currently, the most optimistic analyst values ​​Troax Group at 291 kr per share, while the most pessimistic analyst values ​​it at 236 kr. As you can see, the range of estimates is wide, with the lowest valuation being less than half of the most optimistic estimate, suggesting that there are widely divergent views on how analysts think the company will perform. With that in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average, and analysts obviously have very different views on the company.

Now, looking at the bigger picture, one of the ways we can understand these forecasts is by comparing them with past performance and industry growth estimates. We would like to highlight that Troax Group's revenue growth is expected to slow down. The forecast annual growth rate of 10% through the end of 2024 is well below the historical growth of 13% per year over the past five years. For comparison, the other companies in this industry covered by analysts are forecast to grow their revenues by 4.6% per year. Even after the forecast growth slowdown, it seems obvious that Troax Group is also expected to grow faster than the industry as a whole.

The conclusion

Most importantly, analysts have revised downward their earnings per share estimates, showing that sentiment has significantly weakened following these results. They have also revised downward Troax Group's revenue forecasts, but industry data suggests that the company is expected to grow faster than the wider industry. There has been no real change in the consensus price target, suggesting that the company's intrinsic value has not changed much with the latest estimates.

With this in mind, we would not rush to a judgement on the Troax Group. Long-term profitability is much more important than next year's earnings. We have forecasts for the Troax Group up to 2026, which you can view here for free on our platform.

We don’t want to spoil the fun too much, but we also found 1 warning sign for the Troax Group that you need to consider.

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