SinterCast AB (publ) (STO:SINT) has just released its second quarter results and analysts are updating their estimates

Shareholders may have noticed that SinterCast AB (publ) (STO:SINT) reported its second-quarter results this time last week. Initial reactions were not positive, with shares falling 2.1% to 114 krone last week. SinterCast reported in line with analysts' forecasts, reporting revenue of 35 million krone and statutory earnings per share of 1.48 krone, suggesting the company is running well and in line with its plan. 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 determine if expectations for the company have changed. We thought readers would find it interesting to see analysts' latest (statutory) forecasts for next year after the earnings announcement.

Check out our latest analysis for SinterCast

Following the latest earnings report, the only analyst covering SinterCast is expecting revenue of 136.0 million crowns in 2024. This represents a small 5.3% decrease in revenue compared to the last 12 months. Statutory earnings per share are expected to fall 22% to 5.09 crowns over the same period. Prior to this earnings report, the analyst had forecast revenue of 142.0 million crowns and earnings per share (EPS) of 5.32 crowns in 2024. Given the reduced revenue forecasts and the minor downgrade of earnings per share expectations, analysts are less optimistic than they were prior to these results.

The analyst made no significant changes to the price target of 130 crowns and indicated that the downgrades are not expected to have a long-term impact on SinterCast's valuation.

Now, looking at the bigger picture, one of the ways we can understand these forecasts is to compare them to past performance and industry growth estimates. We'd like to highlight that revenue trajectory is expected to reverse, with a forecast decline of 10% on an annualized basis by the end of 2024. That's a notable change from the historical growth of 6.0% over the past five years. In contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to grow revenue at 4.5% per year for the foreseeable future. So while revenue is forecast to decline, there is no silver lining to this cloud – SinterCast is expected to underperform the wider industry.

The conclusion

Most importantly, the analyst has revised downwards their earnings per share estimates, which shows that sentiment has significantly weakened following these results. Unfortunately, they have also revised downwards their revenue estimates, and our data suggests underperformance compared to the wider industry. Still, earnings per share are more important to the company's intrinsic value. The consensus price target remained stable at 130 kr, with recent estimates not enough to impact the price target.

With this in mind, we wouldn't jump to a conclusion about SinterCast too quickly. Long-term earnings power is much more important than next year's earnings. At least one analyst has provided forecasts up to 2026, which can be viewed free of charge here on our platform.

Nevertheless, the ever-present specter of investment risk must be taken into account. We have identified 2 warning signs with SinterCast, and understanding these should be part of your investment process.

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.