Investors in Daseke, Inc. (NASDAQ:DSKE) had a good week, as its shares rose 4.9% to close at US$6.89 following the release of its third-quarter results. It was overall a positive result, with revenues beating expectations by 5.3% to hit US$376m. Daseke also reported a statutory profit of US$0.22, which was a nice improvement from the loss that the analysts were predicting. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the recent earnings report, the consensus from three analysts covering Daseke is for revenues of US$1.47b in 2021, implying a measurable 3.3% decline in sales compared to the last 12 months. Earnings are expected to improve, with Daseke forecast to report a statutory profit of US$0.26 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.53b and earnings per share (EPS) of US$0.12 in 2021. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the considerable lift to to the earnings per share numbers.
The average price target increased 7.0% to US$8.63, with the analysts signalling that the improved earnings outlook is more important to the company's valuation than its revenue. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Daseke, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$8.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 3.3% revenue decline a notable change from historical growth of 25% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Daseke is expected to lag 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 Daseke's earnings potential next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Daseke analysts - going out to 2022, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Daseke , and understanding this should be part of your investment process.
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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