It's been a good week for Charles River Laboratories International, Inc. (NYSE:CRL) shareholders, because the company has just released its latest full-year results, and the shares gained 8.6% to US$171. Charles River Laboratories International reported US$2.6b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$5.07 beat expectations, being 4.6% higher than what analysts expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Charles River Laboratories International's 14 analysts is for revenues of US$2.97b in 2020, which would reflect a meaningful 13% increase on its sales over the past 12 months. Statutory earnings per share are expected to rise 5.7% to US$5.47. Before this earnings report, analysts had been forecasting revenues of US$2.91b and earnings per share (EPS) of US$5.83 in 2020. So it's pretty clear consensus is mixed on Charles River Laboratories International after the latest results; while analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.
Analysts also upgraded Charles River Laboratories International's price target 10% to US$181, implying that the higher sales are expected to generate enough value to offset the forecast decline in earnings. 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 Charles River Laboratories International at US$204 per share, while the most bearish prices it at US$118. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Charles River Laboratories International's performance in recent years. We can infer from the latest estimates that analysts are expecting a continuation of Charles River Laboratories International's historical trends, as next year's forecast 13% revenue growth is roughly in line with 15% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 7.8% next year. So it's pretty clear that Charles River Laboratories International is forecast to grow substantially faster than its market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Charles River Laboratories International. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Charles River Laboratories International. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Charles River Laboratories International going out to 2023, and you can see them free on our platform here..
You can also view our analysis of Charles River Laboratories International's balance sheet, and whether we think Charles River Laboratories International is carrying too much debt, for free on our platform here.
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