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Charles & Colvard, Ltd. Just Beat EPS By 200%: Here's What Analysts Think Will Happen Next

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Charles & Colvard, Ltd. (NASDAQ:CTHR) just released its latest quarterly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 7.5% to hit US$12m. Charles & Colvard also reported a statutory profit of US$0.09, which was an impressive 200% above what the analyst had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimate suggests is in store for next year.

See our latest analysis for Charles & Colvard

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Charles & Colvard's sole analyst is for revenues of US$33.6m in 2021, which would reflect a notable 8.4% improvement in sales compared to the last 12 months. Charles & Colvard is also expected to turn profitable, with statutory earnings of US$0.06 per share. Yet prior to the latest earnings, the analyst had been anticipated revenues of US$33.6m and earnings per share (EPS) of US$0.06 in 2021. The consensus analyst doesn't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target rose 80% to US$2.70despite there being no meaningful change to earnings estimates. It could be that the analystare reflecting the predictability of Charles & Colvard's earnings by assigning a price premium.

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. The analyst is definitely expecting Charles & Colvard's growth to accelerate, with the forecast 8.4% growth ranking favourably alongside historical growth of 3.4% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 10% per year. Charles & Colvard 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 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. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

You still need to take note of risks, for example - Charles & Colvard has 2 warning signs we think you should be aware of.

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 (at) simplywallst.com.