Last week, you might have seen that Enghouse Systems Limited (TSE:ENGH) released its annual result to the market. The early response was not positive, with shares down 4.3% to CA$61.86 in the past week. Enghouse Systems missed revenue estimates by 2.5%, with sales of CA$504m, although statutory earnings per share (EPS) of CA$1.77 beat expectations, coming in 3.8% ahead of analyst estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Enghouse Systems after the latest results.
After the latest results, the five analysts covering Enghouse Systems are now predicting revenues of CA$554.4m in 2021. If met, this would reflect a decent 10% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be CA$1.82, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of CA$578.7m and earnings per share (EPS) of CA$1.85 in 2021. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The average price target was steady at CA$82.00even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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. Currently, the most bullish analyst values Enghouse Systems at CA$98.00 per share, while the most bearish prices it at CA$71.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Enghouse Systems' past performance and to peers in the same industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 10%, in line with its 10% annual growth over the past five years. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues grow 19% next year. So it's pretty clear that Enghouse Systems is expected to grow slower than similar companies in the same industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. 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. Still, earnings are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Enghouse Systems going out to 2022, and you can see them free on our platform here..
You still need to take note of risks, for example - Enghouse Systems has 2 warning signs (and 1 which is a bit concerning) we think you should know about.
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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