Koninklijke Philips N.V. (AMS:PHIA) Just Released Its Full-Year Results And Analysts Are Updating Their Estimates

It's been a good week for Koninklijke Philips N.V. (AMS:PHIA) shareholders, because the company has just released its latest yearly results, and the shares gained 7.9% to €16.69. Revenues of €18b beat expectations by a respectable 2.3%, although statutory losses per share increased. Koninklijke Philips lost €1.82, which was 22% more than what the analysts had included in their models. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Koninklijke Philips

Following last week's earnings report, Koninklijke Philips' 14 analysts are forecasting 2023 revenues to be €18.1b, approximately in line with the last 12 months. Earnings are expected to improve, with Koninklijke Philips forecast to report a statutory profit of €0.57 per share. Before this earnings report, the analysts had been forecasting revenues of €18.2b and earnings per share (EPS) of €0.76 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

The consensus price target held steady at €15.74, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Koninklijke Philips, with the most bullish analyst valuing it at €30.00 and the most bearish at €9.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast out to 2023. That would be a definite improvement, given that the past five years have seen sales shrink 0.3% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.3% per year. Although Koninklijke Philips' revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Koninklijke Philips' revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Koninklijke Philips. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Koninklijke Philips analysts - going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 4 warning signs we've spotted with Koninklijke Philips (including 2 which don't sit too well with us) .

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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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