It's been a good week for Charlotte's Web Holdings, Inc. (TSE:CWEB) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.8% to CA$6.04. Revenues of US$21m beat expectations by a respectable 4.2%, although statutory losses per share increased. Charlotte's Web Holdings lost US$0.11, which was 74% more than what the analysts had included in their models. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Charlotte's Web Holdings from eight analysts is for revenues of US$110.2m in 2020 which, if met, would be a meaningful 17% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 55% to US$0.13. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$110.6m and losses of US$0.11 per share in 2020. So it's pretty clear the analysts have mixed opinions on Charlotte's Web Holdings even after this update; although they reconfirmed their revenue numbers, it came at the cost of a per-share losses.
The consensus price target held steady at US$5.46, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Charlotte's Web Holdings at US$7.10 per share, while the most bearish prices it at US$3.91. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Charlotte's Web Holdings shareholders.
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. Next year brings more of the same, according to the analysts, with revenue forecast to grow 17%, in line with its 21% annual growth over the past year. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues grow 32% next year. So although Charlotte's Web Holdings is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$5.46, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Charlotte's Web Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for Charlotte's Web Holdings going out to 2023, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Charlotte's Web Holdings you should be aware of.
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