Investors in CI Financial Corp (TSE:CIX) had a good week, as its shares rose 4.3% to close at CA$16.69 following the release of its quarterly results. The result was positive overall - although revenues of CA$509m were in line with what the analysts predicted, CI Financial surprised by delivering a statutory profit of CA$0.61 per share, modestly greater than expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on CI Financial after the latest results.
Taking into account the latest results, the consensus forecast from CI Financial's three analysts is for revenues of CA$2.17b in 2021, which would reflect a credible 7.5% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 4.8% to CA$2.49. In the lead-up to this report, the analysts had been modelling revenues of CA$2.05b and earnings per share (EPS) of CA$2.48 in 2021. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small increase to to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of CA$20.25, suggesting the analysts are focused on earnings as the driver of value creation. 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. The most optimistic CI Financial analyst has a price target of CA$23.00 per share, while the most pessimistic values it at CA$17.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that CI Financial's rate of growth is expected to accelerate meaningfully, with the forecast 7.5% revenue growth noticeably faster than its historical growth of 1.9%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 7.1% next year. It seems obvious that as part of the brighter growth outlook, CI Financial is expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider industry. The consensus price target held steady at CA$20.25, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for CI Financial going out to 2024, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 3 warning signs for CI Financial (of which 1 is concerning!) you should know about.
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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