Analysts Just Shipped A Notable Upgrade To Their Stella-Jones Inc. (TSE:SJ) Estimates
Celebrations may be in order for Stella-Jones Inc. (TSE:SJ) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.
Following the upgrade, the most recent consensus for Stella-Jones from its eight analysts is for revenues of CA$3.0b in 2021 which, if met, would be a meaningful 11% increase on its sales over the past 12 months. Per-share earnings are expected to expand 16% to CA$4.14. Before this latest update, the analysts had been forecasting revenues of CA$2.6b and earnings per share (EPS) of CA$3.30 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
See our latest analysis for Stella-Jones
Despite these upgrades, the analysts have not made any major changes to their price target of CA$60.00, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. The most optimistic Stella-Jones analyst has a price target of CA$65.00 per share, while the most pessimistic values it at CA$56.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Stella-Jones' rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 8.2% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.2% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Stella-Jones 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. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Stella-Jones.
Still, 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 Stella-Jones going out to 2022, and you can see them free on our platform here..
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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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