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It's been a pretty great week for Interfor Corporation (TSE:IFP) shareholders, with its shares surging 13% to CA$36.92 in the week since its latest first-quarter results. Results were roughly in line with estimates, with revenues of CA$849m and statutory earnings per share of CA$4.00. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Interfor's three analysts is for revenues of CA$2.88b in 2021, which would reflect a decent 13% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 5.1% to CA$8.56. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$2.88b and earnings per share (EPS) of CA$6.75 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.
There's been no major changes to the consensus price target of CA$41.75, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Interfor at CA$50.00 per share, while the most bearish prices it at CA$27.23. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Interfor's rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 3.9% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.6% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Interfor is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Interfor following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. 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 in mind, we wouldn't be too quick to come to a conclusion on Interfor. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Interfor analysts - going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for Interfor you should be aware of, and 1 of them is significant.
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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