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The Consensus EPS Estimates For Chorus Aviation Inc. (TSE:CHR) Just Fell Dramatically

Simply Wall St
·3 min read

Market forces rained on the parade of Chorus Aviation Inc. (TSE:CHR) shareholders today, when the analysts downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Surprisingly the share price has been buoyant, rising 18% to CA$3.54 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the latest downgrade, Chorus Aviation's eight analysts currently expect revenues in 2021 to be CA$1.1b, approximately in line with the last 12 months. Statutory earnings per share are presumed to expand 11% to CA$0.47. Previously, the analysts had been modelling revenues of CA$1.2b 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, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Chorus Aviation


The average price target climbed 6.1% to CA$4.81 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Chorus Aviation analyst has a price target of CA$5.50 per share, while the most pessimistic values it at CA$3.70. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast for next year. That would be a definite improvement, given that the past five years have seen sales shrink five years annually. 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 issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Chorus Aviation. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Chorus Aviation's revenues are expected to grow slower than the wider market. The rising price target is a puzzle, but still - with a serious cut to next year's outlook, we wouldn't be surprised if investors were a bit wary of Chorus Aviation.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Chorus Aviation going out to 2022, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.