BG Staffing, Inc. (NYSE:BGSF) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasts. Results showed a clear earnings miss, with US$74m revenue coming in 2.3% lower than what the analystexpected. Statutory earnings per share (EPS) of US$0.14 missed the mark badly, arriving some 26% below what was expected. Following the result, the analyst has 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. So we gathered the latest post-earnings forecasts to see what estimate suggests is in store for next year.
Taking into account the latest results, the lone analyst covering BG Staffing provided consensus estimates of US$286.2m revenue in 2020, which would reflect a discernible 4.5% decline on its sales over the past 12 months. Statutory earnings per share are expected to dive 24% to US$0.91 in the same period. In the lead-up to this report, the analyst had been modelling revenues of US$315.1m and earnings per share (EPS) of US$0.91 in 2020. So it looks like the analyst has become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
It will come as no surprise then, that the consensus price target fell 40% to US$15.00 following these changes.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.5%, a significant reduction from annual growth of 8.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.7% annually for the foreseeable future. It's pretty clear that BG Staffing's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analyst reconfirming that the business is performing in line with their previous earnings per share estimates. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Still, earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of BG Staffing's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for BG Staffing going out as far as 2020, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for BG Staffing that we have uncovered.
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