Cirrus Logic, Inc. (NASDAQ:CRUS) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 8.5% to hit US$375m. Cirrus Logic also reported a statutory profit of US$1.13, which was an impressive 36% above what analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Cirrus Logic's ten analysts are now forecasting revenues of US$1.30b in 2021. This would be a credible 4.8% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$2.70, roughly flat on the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.26b and earnings per share (EPS) of US$2.16 in 2021. So it seems there's been a definite increase in optimism about Cirrus Logic's future following the latest results, with a massive increase in the earnings per share forecasts in particular.
With these upgrades, we're not surprised to see that analysts have lifted their price target 20% to US$87.56 per share. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Cirrus Logic, with the most bullish analyst valuing it at US$100.00 and the most bearish at US$65.00 per share. 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 Cirrus Logic shareholders.
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. Next year brings more of the same, according to analysts, with revenue forecast to grow 4.8%, in line with its 4.8% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.3% per year. So it's pretty clear that Cirrus Logic is expected to grow slower than similar companies in the same market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Cirrus Logic's earnings potential next year. Fortunately, analysts also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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 Cirrus Logic. 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 Cirrus Logic going out to 2022, and you can see them free on our platform here..
We also provide an overview of the Cirrus Logic Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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