Market forces rained down on the parade of Melhus Relief Bank (OB:MELG) shareholders today when the hedge analyst downgraded its forecast for this year. There’s been a pretty drastic reduction in their revenue estimates, perhaps an implicit admission that previous forecasts were far too optimistic.
After the downgrade, Melhus Sparebank’s sole analyst consensus is for revenue of 179m kr in 2022, which would reflect a worrying 26% drop in sales from the last year of performance. Statutory earnings per share should be 13.65 kr, roughly stable over the last 12 months. Prior to this update, the analyst forecast revenue of 231 million kr and earnings per share (EPS) of 13.52 kr in 2022. Indeed, we can see that the consensus opinion has undergone fundamental changes following to recent consensus updates, with a fairly serious cut in revenue and some minor tweaks to earnings numbers.
See our latest analysis for Melhus Sparebank
The average price target remained stable at 172 kr even though revenue estimates declined; probably suggesting that the analyst places a higher value on earnings.
One way to get more context on these forecasts is to examine how they compare both to past performance and to the performance of other companies in the same industry. Something else that struck us about these estimates, and that was the idea that Melhus Sparebank’s decline is set to accelerate, with revenues expected to fall at an annualized rate of 34% through the end of 2022. This caps a historic decline of 4.2%. % per year over the last five years. In contrast, our data suggests that other companies (with analyst coverage) in a similar industry should see revenue growth of 8.8% annually. So it’s pretty clear that while its revenue is down, the analyst also expects Melhus Sparebank to suffer more than the industry as a whole.
The most important thing to take away is that there was no major change in sentiment, with the analyst reconfirming that earnings per share should continue to perform in line with his earlier expectations. Unfortunately, they’ve also lowered their revenue estimates, and the latest forecasts imply that the company will grow sales more slowly than the broader market. All in all, given the drastic downgrade to this year’s outlook, we would be slightly more wary of Melhus Sparebank going forward.
Yet the company’s long-term outlook is far more relevant than next year’s earnings. We have analyst estimates for Melhus Sparebank up to 2024, and you can view them for free on our platform here.
Of course, see the management of the company invest large sums of money in a stock can be just as useful as knowing if analysts are lowering their estimates. So you can also search this free list of stocks that insiders buy.
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