Chorus Aviation Inc. (TSE:CHR) just released its latest third-quarter report and things are not looking great. Earnings fell badly short of analyst estimates, with CA$196m revenues missing by 10%, and statutory earnings per share (EPS) of CA$0.12 falling short of forecasts by some -20%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week's earnings report, Chorus Aviation's eight analysts are forecasting 2021 revenues to be CA$1.09b, approximately in line with the last 12 months. Statutory earnings per share are predicted to step up 11% to CA$0.47. Before this earnings report, the analysts had been forecasting revenues of CA$1.23b and earnings per share (EPS) of CA$0.59 in 2021. Indeed, we can see that the analysts are a lot more bearish about Chorus Aviation's prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.
What's most unexpected is that the consensus price target rose 6.1% to CA$4.81, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Chorus Aviation, with the most bullish analyst valuing it at CA$5.50 and the most bearish at CA$3.70 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. It's also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues next year. Historically, Chorus Aviation's sales have shrunk approximately 3.0% annually over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 26% next year. Although Chorus Aviation's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Chorus Aviation. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Chorus Aviation going out to 2022, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Chorus Aviation (1 is a bit unpleasant) 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.
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