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BG Staffing, Inc. Just Beat EPS By 85%: Here's What Analysts Think Will Happen Next

Simply Wall St
·3 min read

BG Staffing, Inc. (NYSE:BGSF) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 3.5% to hit US$72m. BG Staffing also reported a statutory profit of US$0.25, which was an impressive 85% above what the analysts had forecast. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for BG Staffing

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earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from BG Staffing's twin analysts is for revenues of US$300.5m in 2021, which would reflect a credible 7.1% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 426% to US$1.01. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$307.1m and earnings per share (EPS) of US$0.93 in 2021. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

The average price target rose 8.2% to US$16.50, with the analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the BG Staffing's past performance and to peers in the same industry. It's clear from the latest estimates that BG Staffing's rate of growth is expected to accelerate meaningfully, with the forecast 7.1% revenue growth noticeably faster than its historical growth of 5.9%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 8.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that BG Staffing is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around BG Staffing's earnings potential next year. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Even so, earnings are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 analyst estimates for BG Staffing going out as far as 2021, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with BG Staffing , and understanding them should be part of your investment process.

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 editorial-team@simplywallst.com.