Shareholders might have noticed that mdf commerce inc. (TSE:MDF) filed its quarterly result this time last week. The early response was not positive, with shares down 7.7% to CA$9.15 in the past week. Revenues of CA$21m beat expectations by a respectable 3.1%, although statutory losses per share increased. mdf commerce lost CA$0.04, which was 33% more than what the analysts had included in their models. 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. 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 most recent consensus for mdf commerce from five analysts is for revenues of CA$83.8m in 2021 which, if met, would be an okay 7.1% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 74% to CA$0.17. Before this latest report, the consensus had been expecting revenues of CA$81.6m and CA$0.12 per share in losses. While this year's revenue estimates increased, there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
Spiting the revenue upgrading, the average price target fell 5.2% to CA$11.38, clearly signalling that higher forecast losses are a valuation concern. 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 mdf commerce at CA$12.00 per share, while the most bearish prices it at CA$10.50. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting mdf commerce is an easy business to forecast or the the analysts are all using similar assumptions.
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 mdf commerce's rate of growth is expected to accelerate meaningfully, with the forecast 7.1% revenue growth noticeably faster than its historical growth of 1.7%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 30% per year. So it's clear that despite the acceleration in growth, mdf commerce is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at mdf commerce. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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. We have forecasts for mdf commerce going out to 2023, and you can see them free on our platform here.
Even so, be aware that mdf commerce is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.