Last week, you might have seen that Blue Bird Corporation (NASDAQ:BLBD) released its second-quarter result to the market. The early response was not positive, with shares down 8.1% to US$11.78 in the past week. Revenues came in 22% better than analyst models predicted, at US$255m. The company was unable to deliver a profit however, with statutory losses of US$0.02 well below the profits that 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the recent earnings report, the consensus from two analysts covering Blue Bird is for revenues of US$953.5m in 2020, implying a considerable 10% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to nosedive 27% to US$0.69 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$919.6m and earnings per share (EPS) of US$1.18 in 2020. So it's pretty clear the analysts have mixed opinions on Blue Bird after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.
The consensus price target fell 23% to US$17.00, suggesting that the analysts are primarily focused on earnings as the driver of value for this business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 10%, a significant reduction from annual growth of 3.6% 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 5.9% annually for the foreseeable future. It's pretty clear that Blue Bird's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Blue Bird's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Blue Bird. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
Before you take the next step you should know about the 4 warning signs for Blue Bird (1 is a bit concerning!) that we have uncovered.
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