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Earnings Beat: Systemax Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

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Systemax Inc. (NYSE:SYX) just released its quarterly report 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$242m, while EPS were US$0.43 beating analyst models by 115%. 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.

View our latest analysis for Systemax

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Taking into account the latest results, the consensus forecast from Systemax's twin analysts is for revenues of US$1.01b in 2020, which would reflect a credible 3.5% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 6.7% to US$1.68. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$966.4m and earnings per share (EPS) of US$1.36 in 2020. 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.

It will come as no surprise to learn that the analysts have increased their price target for Systemax 29% to US$36.00on the back of these upgrades.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Systemax's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 3.5%, well above its historical decline of 7.5% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.7% per year. Although Systemax's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than 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 Systemax's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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.

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 analyst estimates for Systemax going out as far as 2022, 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 Systemax 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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