It's shaping up to be a tough period for VirTra, Inc. (NASDAQ:VTSI), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. It was not a great statutory result, with revenues coming in 31% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.05. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the two analysts covering VirTra, is for revenues of US$16.8m in 2020, which would reflect an uneasy 11% reduction in VirTra's sales over the past 12 months. The statutory loss per share is expected to greatly reduce in the near future, narrowing 1238% to US$0.13. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$19.6m and earnings per share (EPS) of US$0.01 in 2020. So we can see that the consensus has become notably more bearish on VirTra's outlook following these results, with a real cut to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous calls for a profit.
There was no major change to the consensus price target of US$5.00, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 11%, a significant reduction from annual growth of 6.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.3% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - VirTra is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts are expecting VirTra to become unprofitable next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$5.00, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for VirTra you should know about.
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