BRP Group, Inc. (NASDAQ:BRP) just released its quarterly report and things are looking bullish. BRP Group delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$54m, some 20% above indicated. Statutory EPS were US$0.07, an impressive 110% ahead of forecasts. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from BRP Group's five analysts is for revenues of US$227.2m in 2020, which would reflect a major 40% increase on its sales over the past 12 months. BRP Group is also expected to turn profitable, with statutory earnings of US$0.059 per share. In the lead-up to this report, the analysts had been modelling revenues of US$208.3m and earnings per share (EPS) of US$0.037 in 2020. So it seems there's been a definite increase in optimism about BRP Group's future following the latest results, with a great increase in the earnings per share forecasts in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$13.83, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values BRP Group at US$20.00 per share, while the most bearish prices it at US$10.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We would highlight that BRP Group's revenue growth is expected to slow, with forecast 40% increase next year well below the historical 78% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.4% next year. So it's pretty clear that, while BRP Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards BRP Group following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on BRP Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple BRP Group analysts - going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with BRP Group .
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