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Computer Programs and Systems, Inc. (NASDAQ:CPSI) defied analyst predictions to release its quarterly results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of US$68m, some 7.0% above estimates, and statutory earnings per share (EPS) coming in at US$0.36, 54% ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Computer Programs and Systems after the latest results.
Taking into account the latest results, the current consensus from Computer Programs and Systems' nine analysts is for revenues of US$282.2m in 2021, which would reflect a satisfactory 5.2% increase on its sales over the past 12 months. Statutory earnings per share are predicted to climb 12% to US$1.73. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$279.0m and earnings per share (EPS) of US$1.62 in 2021. So the consensus seems to have become somewhat more optimistic on Computer Programs and Systems' earnings potential following these results.
The consensus price target was unchanged at US$32.14, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Computer Programs and Systems, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$27.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Computer Programs and Systems is an easy business to forecast or the the analysts are all using similar assumptions.
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 5.2%, in line with its 5.9% 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 19% per year. So although Computer Programs and Systems is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Computer Programs and Systems' earnings potential 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$32.14, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Computer Programs and Systems going out to 2024, and you can see them free on our platform here..
Plus, you should also learn about the 3 warning signs we've spotted with Computer Programs and Systems .
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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