Earnings Beat: Kornit Digital Ltd. (NASDAQ:KRNT) Just Beat Analyst Forecasts, And Analysts Have Been Lifting Their Forecasts
The investors in Kornit Digital Ltd.'s (NASDAQ:KRNT) will be rubbing their hands together with glee today, after the share price leapt 63% to US$47.74 in the week following its quarterly results. It was a pretty bad result overall; while revenues were in line with expectations at US$26m, statutory losses exploded to US$0.25 per share. 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. 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 Kornit Digital
Taking into account the latest results, the five analysts covering Kornit Digital provided consensus estimates of US$163.4m revenue in 2020, which would reflect a perceptible 2.4% decline on its sales over the past 12 months. The company is forecast to report a statutory loss of US$0.18 in 2020, a sharp decline from a profit over the last year. Before this earnings announcement, the analysts had been modelling revenues of US$129.8m and losses of US$0.27 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target rose 25% to US$40.33, with the analysts encouraged by the higher revenue and lower forecast losses for next year. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Kornit Digital at US$47.00 per share, while the most bearish prices it at US$34.00. 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 Kornit Digital shareholders.
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 sales are expected to reverse, with the forecast 2.4% revenue decline a notable change from historical growth of 17% 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 5.7% annually for the foreseeable future. It's pretty clear that Kornit Digital's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. 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.
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. At Simply Wall St, we have a full range of analyst estimates for Kornit Digital going out to 2021, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 4 warning signs for Kornit Digital you should know about.
Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
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.
