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A week ago, Bentley Systems, Incorporated (NASDAQ:BSY) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$222m, some 3.2% above estimates, and statutory earnings per share (EPS) coming in at US$0.18, 64% ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 Bentley Systems' seven analysts is for revenues of US$911.5m in 2021, which would reflect a decent 10.0% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$0.52, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$906.0m and earnings per share (EPS) of US$0.43 in 2021. Although the revenue estimates have not really changed, we can see there's been a considerable lift to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
There's been no major changes to the consensus price target of US$52.14, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Bentley Systems, with the most bullish analyst valuing it at US$55.00 and the most bearish at US$49.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Bentley Systems is an easy business to forecast or the the analysts are all using similar assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Bentley Systems' rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 9.4% over the past year. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 13% per year. Bentley Systems is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Bentley Systems' earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$52.14, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Bentley Systems analysts - going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Bentley Systems 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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