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Driven Brands Holdings Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Driven Brands Holdings Inc. (NASDAQ:DRVN) just released its latest second-quarter results and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 16% higher than the analysts had forecast, at US$375m, while EPS were US$0.21 beating analyst models by 57%. The 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Driven Brands Holdings

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Taking into account the latest results, the current consensus from Driven Brands Holdings' eight analysts is for revenues of US$1.40b in 2021, which would reflect a meaningful 11% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 482% to US$0.50. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.31b and earnings per share (EPS) of US$0.27 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a sizeable expansion in earnings per share in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 7.3% to US$39.33per share. 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 Driven Brands Holdings, with the most bullish analyst valuing it at US$47.00 and the most bearish at US$32.00 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 Driven Brands Holdings shareholders.

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. It's pretty clear that there is an expectation that Driven Brands Holdings' revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 24% growth on an annualised basis. This is compared to a historical growth rate of 74% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.9% per year. So it's pretty clear that, while Driven Brands Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Driven Brands Holdings' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Driven Brands Holdings going out to 2023, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for Driven Brands Holdings (of which 1 shouldn't be ignored!) you should know about.

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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