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RingCentral, Inc. (NYSE:RNG) shareholders are probably feeling a little disappointed, since its shares fell 2.5% to US$260 in the week after its latest second-quarter results. The results don't look great, especially considering that statutory losses grew 53% toUS$1.22 per share. Revenues of US$379m did beat expectations by 5.7%, but it looks like a bit of a cold comfort. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for RingCentral from 26 analysts is for revenues of US$1.51b in 2021 which, if met, would be a decent 10% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.67 per share. Before this latest report, the consensus had been expecting revenues of US$1.51b and US$2.67 per share in losses.
The consensus price target was unchanged at US$413, suggesting that the business - losses and all - is executing in line with estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values RingCentral at US$525 per share, while the most bearish prices it at US$275. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that RingCentral's revenue growth is expected to slow, with the forecast 21% annualised growth rate until the end of 2021 being well below the historical 27% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% annually. So it's pretty clear that, while RingCentral's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for RingCentral going out to 2023, and you can see them free on our platform here..
It is also worth noting that we have found 4 warning signs for RingCentral that you need to take into consideration.
This article by Simply Wall St is general in nature. 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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