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Earnings Update: Here's Why Analysts Just Lifted Their Franklin Covey Co. Price Target To US$47.00

Simply Wall St

Last week, you might have seen that Franklin Covey Co. (NYSE:FC) released its first-quarter result to the market. The early response was not positive, with shares down 2.6% to US$32.09 in the past week. It looks like the results were pretty good overall. While revenues of US$59m were in line with analyst predictions, statutory losses were much smaller than expected, with Franklin Covey losing US$0.04 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.

View our latest analysis for Franklin Covey

NYSE:FC Past and Future Earnings, January 12th 2020
NYSE:FC Past and Future Earnings, January 12th 2020

Taking into account the latest results, the latest consensus from Franklin Covey's five analysts is for revenues of US$244.1m in 2020, which would reflect a modest 6.0% improvement in sales compared to the last 12 months. Franklin Covey is also expected to turn profitable, with statutory earnings of US$0.36 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$243.3m and earnings per share (EPS) of US$0.40 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.

Despite cutting their earnings forecasts, analysts have lifted their price target 37% to US$47.00, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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. There are some variant perceptions on Franklin Covey, with the most bullish analyst valuing it at US$51.00 and the most bearish at US$45.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Franklin Covey's performance in recent years. Analysts are definitely expecting Franklin Covey's growth to accelerate, with the forecast 6.0% growth ranking favourably alongside historical growth of 1.5% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 6.8% next year. Franklin Covey is expected to grow at about the same rate as its market, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Franklin Covey going out to 2024, and you can see them free on our platform here.

We also provide an overview of the Franklin Covey Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

If you spot an error that warrants correction, please contact the editor at 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.