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Shareholders in CanWel Building Materials Group Ltd. (TSE:CWX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. Investor sentiment seems to be improving too, with the share price up 5.0% to CA$9.70 over the past 7 days. Could this big upgrade push the stock even higher?
Following the upgrade, the most recent consensus for CanWel Building Materials Group from its five analysts is for revenues of CA$2.1b in 2021 which, if met, would be a substantial 29% increase on its sales over the past 12 months. Statutory earnings per share are presumed to soar 100% to CA$1.53. Previously, the analysts had been modelling revenues of CA$1.8b and earnings per share (EPS) of CA$0.81 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for CanWel Building Materials Group 14% to CA$11.76 on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on CanWel Building Materials Group, with the most bullish analyst valuing it at CA$12.25 and the most bearish at CA$10.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the CanWel Building Materials Group's past performance and to peers in the same industry. It's clear from the latest estimates that CanWel Building Materials Group's rate of growth is expected to accelerate meaningfully, with the forecast 29% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.1% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect CanWel Building Materials Group to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at CanWel Building Materials Group.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple CanWel Building Materials Group analysts - going out to 2024, and you can see them free on our platform here.
We also provide an overview of the CanWel Building Materials Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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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