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AudioCodes Ltd. (NASDAQ:AUDC) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were US$59m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.29, an impressive 32% ahead of 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the four analysts covering AudioCodes are now predicting revenues of US$246.0m in 2021. If met, this would reflect a solid 8.1% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 9.0% to US$1.08. In the lead-up to this report, the analysts had been modelling revenues of US$244.9m and earnings per share (EPS) of US$1.05 in 2021. So the consensus seems to have become somewhat more optimistic on AudioCodes' earnings potential following these results.
There's been no major changes to the consensus price target of US$40.20, 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. There are some variant perceptions on AudioCodes, with the most bullish analyst valuing it at US$46.00 and the most bearish at US$34.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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. We can infer from the latest estimates that forecasts expect a continuation of AudioCodes'historical trends, as the 11% annualised revenue growth to the end of 2021 is roughly in line with the 10% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.8% per year. So although AudioCodes is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider 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 AudioCodes following these results. 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. 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 AudioCodes. 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 AudioCodes going out to 2023, and you can see them free on our platform here..
Even so, be aware that AudioCodes is showing 1 warning sign in our investment analysis , 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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