Shareholders in Leaf Group Ltd. (NYSE:LEAF) had a terrible week, as shares crashed 32% to US$1.51 in the week since its latest yearly results. Sales hit US$155m in line with forecasts, although the company reported a statutory loss per share of US$1.03 that was somewhat smaller than analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus, from the two analysts covering Leaf Group, is for revenues of US$149.2m in 2020, which would reflect a discernible 3.7% reduction in Leaf Group's sales over the past 12 months. Per-share statutory losses are expected to explode, reaching US$0.75 per share. Before this earnings announcement, analysts had been forecasting revenues of US$157.4m and losses of US$0.67 per share in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
The average analyst price target fell 33% to US$4.50, implicitly signalling that lower earnings per share are a leading indicator for Leaf Group's valuation.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Leaf Group's past performance and to peers in the same market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.7% a significant reduction from annual growth of 2.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 16% annually for the foreseeable future. It's pretty clear that Leaf Group's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that analysts reduced their loss per share estimates for next year, perhaps highlighting increased optimism around Leaf Group's prospects. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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