Cinedigm Corp. (NASDAQ:CIDM) shares fell 5.4% to US$0.88 in the week since its latest second-quarter results. Revenues of US$10m missed forecasts by 17%, but at least losses were much smaller than expected, with per-share losses of US$0.08 coming in 167% smaller than what analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Cinedigm after the latest results.
Following the recent earnings report, the consensus fromonly analyst covering Cinedigm expects revenues of US$44.1m in 2020, implying a small 5.7% decline in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.20 per share. Before this earnings announcement, analysts had been forecasting revenues of US$68.0m and losses of US$0.11 per share in 2020. It looks like analyst sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a large cut to consensus earnings per share numbers as well.
The average analyst price target fell 25% to US$1.50, implicitly signalling that lower earnings per share are a leading indicator for Cinedigm's valuation.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Over the past five years, revenues have declined around 17% annually. On the bright side, analysts expect the decline to level off somewhat, with the forecast for a 5.7% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 11% per year. So it's pretty clear that, while it does have declining revenues, at least analysts expect Cinedigm to suffer less severely than the wider market.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses next year, perhaps suggesting Cinedigm is moving incrementally towards profitability. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Cinedigm going out as far as 2023, and you can see them free on our platform here.
You can also view our analysis of Cinedigm's balance sheet, and whether we think Cinedigm is carrying too much debt, for free on our platform here.
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