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Charles River Laboratories International, Inc. (NYSE:CRL) just released its quarterly report and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$743m, some 3.9% above estimates, and statutory earnings per share (EPS) coming in at US$2.03, 56% ahead of expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Charles River Laboratories International after the latest results.
Taking into account the latest results, the current consensus from Charles River Laboratories International's 17 analysts is for revenues of US$3.17b in 2021, which would reflect a decent 12% increase on its sales over the past 12 months. Statutory earnings per share are predicted to ascend 13% to US$6.82. Before this earnings report, the analysts had been forecasting revenues of US$3.13b and earnings per share (EPS) of US$6.59 in 2021. So the consensus seems to have become somewhat more optimistic on Charles River Laboratories International's earnings potential following these results.
The consensus price target was unchanged at US$249, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values Charles River Laboratories International at US$281 per share, while the most bearish prices it at US$130. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Charles River Laboratories International's revenue growth is expected to slow, with forecast 12% increase next year well below the historical 15%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.1% next year. So it's pretty clear that, while Charles River Laboratories International's 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 Charles River Laboratories International's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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.
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 forecasts for Charles River Laboratories International going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Charles River Laboratories International that you need to take into consideration.
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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