Earnings Beat: Zedge, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
The investors in Zedge, Inc.'s (NYSEMKT:ZDGE) will be rubbing their hands together with glee today, after the share price leapt 31% to US$5.35 in the week following its first-quarter results. Revenues beat expectations by 41%, and sales of US$3.8m were sufficient to generate a statutory profit of US$0.08 - a pleasant surprise given that the analyst was forecasting a loss! Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analyst has changed their mind on Zedge after the latest results.
View our latest analysis for Zedge
Taking into account the latest results, the most recent consensus for Zedge from solitary analyst is for revenues of US$12.8m in 2021 which, if met, would be a decent 15% increase on its sales over the past 12 months. Per-share earnings are expected to grow 17% to US$0.13. Yet prior to the latest earnings, the analyst had been forecasting revenues of US$11.3m and losses of US$0.03 per share in 2021. It looks like there's been a definite improvement in business conditions, with a revenue upgrade expected to lead to profitability sooner than previously forecast.
It will come as no surprise to learn that the analyst has increased their price target for Zedge 60% to US$8.00on the back of these upgrades.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Zedge is forecast to grow faster in the future than it has in the past, with revenues expected to grow 15%. If achieved, this would be a much better result than the 2.8% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 17% next year. So it looks like Zedge is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analyst now expect Zedge to become profitable next year, compared to previous expectations that it would report a loss. They also upgraded their revenue forecasts, although the latest estimates suggest that Zedge will grow in line with the overall industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.
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 Zedge 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 3 warning signs for Zedge 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
