Canada Goose Holdings Inc. (TSE:GOOS) shares fell 4.3% to CA$40.59 in the week since its latest quarterly results. The result was positive overall - although revenues of CA$452m were in line with what analysts predicted, Canada Goose Holdings surprised by delivering a statutory profit of CA$1.07 per share, modestly greater than expected. Following the result, 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 analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Canada Goose Holdings from twelve analysts is for revenues of CA$1.18b in 2021, which is a sizeable 21% increase on its sales over the past 12 months. Statutory earnings per share are expected to shoot up 30% to CA$1.88. Yet prior to the latest earnings, analysts had been forecasting revenues of CA$1.26b and earnings per share (EPS) of CA$2.11 in 2021. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share forecasts.
The consensus price target fell 13% to CA$51.78, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Canada Goose Holdings at CA$70.54 per share, while the most bearish prices it at CA$38.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. We would highlight that Canada Goose Holdings's revenue growth is expected to slow, with forecast 21% increase next year well below the historical 32%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 7.2% next year. So it's pretty clear that, while Canada Goose Holdings's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Canada Goose Holdings's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Canada Goose Holdings going out to 2022, and you can see them free on our platform here..
You can also see whether Canada Goose Holdings is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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