Last week saw the newest quarterly earnings release from Novem Group S.A. (ETR:NVM), an important milestone in the company's journey to build a stronger business. Results look mixed - while revenue fell marginally short of analyst estimates at €167m, statutory earnings were in line with expectations, at €1.02 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Novem Group

Taking into account the latest results, the consensus forecast from Novem Group's four analysts is for revenues of €720.7m in 2024, which would reflect a satisfactory 5.1% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 9.6% to €1.64. Yet prior to the latest earnings, the analysts had been anticipated revenues of €740.3m and earnings per share (EPS) of €1.82 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The average price target climbed 44% to €16.17despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. 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 Novem Group at €26.00 per share, while the most bearish prices it at €9.50. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Novem Group's past performance and to peers in the same industry. The analysts are definitely expecting Novem Group's growth to accelerate, with the forecast 4.1% annualised growth to the end of 2024 ranking favourably alongside historical growth of 1.7% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 5.8% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Novem Group is expected to grow slower than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Novem Group. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse 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 in mind, we wouldn't be too quick to come to a conclusion on Novem Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Novem Group analysts - going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Novem Group that you should be aware 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.

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