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Shareholders might have noticed that Crown Crafts, Inc. (NASDAQ:CRWS) filed its annual result this time last week. The early response was not positive, with shares down 6.4% to US$4.83 in the past week. The result was positive overall - although revenues of US$73m were in line with what the analyst predicted, Crown Crafts surprised by delivering a statutory profit of US$0.65 per share, modestly greater than expected. Following the result, the analyst has 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 analyst has changed their mind on Crown Crafts after the latest results.
Taking into account the latest results, Crown Crafts' sole analyst currently expect revenues in 2021 to be US$72.7m, approximately in line with the last 12 months. Statutory earnings per share are forecast to decline 10% to US$0.58 in the same period. In the lead-up to this report, the analyst had been modelling revenues of US$74.2m and earnings per share (EPS) of US$0.57 in 2021. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The average price target was reduced 21% to US$5.50, with the lower revenue forecasts indicating negative sentiment towards Crown Crafts, even though earnings forecasts were unchanged.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate from the historical decline of 3.3% per annum over the past five years.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analyst reconfirming that the business is performing in line with their previous earnings per share estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, long term profitability is more important for the value creation process. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Crown Crafts' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Crown Crafts going out as far as 2022, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Crown Crafts (1 is potentially serious!) that we have uncovered.
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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. Thank you for reading.