It’s been a good week for Coca-Cola HBC AG (LON:CCH) shareholders, because the company has just released its latest annual results, and the shares gained 5.0% to UK£23.75. The result was positive overall – although revenues of €6.1b were in line with what the analysts predicted, Coca-Cola HBC surprised by delivering a statutory profit of €1.14 per share, modestly greater than expected. 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Coca-Cola HBC after the latest results.
See our latest analysis for Coca-Cola HBC
Following the latest results, Coca-Cola HBC’s 14 analysts are now forecasting revenues of €6.65b in 2021. This would be a meaningful 8.4% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to grow 18% to €1.35. Before this earnings report, the analysts had been forecasting revenues of €6.65b and earnings per share (EPS) of €1.30 in 2021. So the consensus seems to have become somewhat more optimistic on Coca-Cola HBC’s earnings potential following these results.
There’s been no major changes to the consensus price target of €30.99, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s valuation. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Coca-Cola HBC, with the most bullish analyst valuing it at €29.92 and the most bearish at €21.60 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Coca-Cola HBC is an easy business to forecast or the the analysts are all using similar assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Coca-Cola HBC’s past performance and to peers in the same industry. The analysts are definitely expecting Coca-Cola HBC’s growth to accelerate, with the forecast 8.4% growth ranking favourably alongside historical growth of 1.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.0% next year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Coca-Cola HBC 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 Coca-Cola HBC’s earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at €30.99, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Coca-Cola HBC going out to 2024, and you can see them free on our platform here..
You still need to take note of risks, for example – Coca-Cola HBC has 2 warning signs we think you should be aware of.
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