Chemtrade Logistics Income Fund (TSE:CHE.UN) missed earnings with its latest third-quarter results, disappointing overly-optimistic forecasters. It was a pretty negative result overall, with revenues of CA$346m missing analyst predictions by 4.4%. Worse, the business reported a statutory loss of CA$0.52 per share, much larger than the analysts had forecast prior to the result. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Chemtrade Logistics Income Fund after the latest results.
Taking into account the latest results, the most recent consensus for Chemtrade Logistics Income Fund from seven analysts is for revenues of CA$1.51b in 2021 which, if met, would be a modest 7.0% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 93% to CA$0.11. Before this earnings announcement, the analysts had been modelling revenues of CA$1.51b and losses of CA$0.12 per share in 2021. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading revenues and making a losses per share in particular.
There's been no major changes to the consensus price target of CA$6.83, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. 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. The most optimistic Chemtrade Logistics Income Fund analyst has a price target of CA$9.00 per share, while the most pessimistic values it at CA$5.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Chemtrade Logistics Income Fund shareholders.
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. Next year brings more of the same, according to the analysts, with revenue forecast to grow 7.0%, in line with its 8.2% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 4.5% next year. So it's pretty clear that Chemtrade Logistics Income Fund is forecast to grow substantially faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at CA$6.83, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Chemtrade Logistics Income Fund. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Chemtrade Logistics Income Fund going out to 2022, and you can see them free on our platform here..
It is also worth noting that we have found 3 warning signs for Chemtrade Logistics Income Fund 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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